UPDATE: MKM Partners Starts Lyft (LYFT) at Neutral
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(Updated - October 3, 2019 8:46 AM EDT)
(updated to add analyst comment)
MKM Partners analyst Rohit Kulkarni initiates coverage on Lyft (NASDAQ: LYFT) with a Neutral rating and a price target of $45.00.
The analyst comments "LYFT has declined ~45% since its IPO (vs. S&P 500 +3%). Lyft is a leading multimodal technology platform for personal consumer transportation, operating a consumer ridesharing marketplace at scale and building out significant networks of alternate transportation options, including bikes and scooters. Our thesis is driven by the company’s significant market opportunity, an emerging duopoly leading to rational competitive behavior, and Lyft’s history of product innovation. However, we expect Lyft to continue to burn cash for another 30 months, and heightened near-term regulatory uncertainty (in SF and NYC) keeps us on the sidelines. We prefer to get clarity around regulations in San Francisco (drivers treated as employees) and New York (limits on number of drivers, hours on road, and hourly wages). While Lyft's growth-adjusted valuation looks attractive, we think LYFT has limited valuation support as the company's fundamentals exhibit a “classic double negative” — significant and ongoing revenue growth deceleration and deteriorating losses. Further, with 2019 GAAP operating margins worse than in 2018, this amplifies the lack of valuation support for a recent IPO, in our opinion."
Shares of Lyft closed at $39.57 yesterday.
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