Apps & Software

Lyft vs Uber: Two Roads to the Same Destination

Paul Ausick

Published: February 10, 2022 1:04 pm

After ride-sharing firm Lyft Inc. (NASDAQ: LYFT) reported earnings Tuesday afternoon, seven analysts weighed in on the company’s performance and outlook. So far Thursday morning, six brokerages had had something to say about Uber Technologies Inc. (NYSE: UBER), which reported results after markets closed Wednesday.

What is interesting about the reactions is no brokerages changed their rating, while many lowered their price targets. In the case of ride-sharers like Lyft and Uber, the lack of change in ratings could indicate that analysts expect both companies to perform well for different reasons.

To recap Lyft’s earnings for the fourth quarter: earnings per share (EPS) of $0.10 beat the consensus estimate by a penny, and revenue of nearly $970 million was 70% higher than in the fourth quarter of last year. Even though Lyft guided current-quarter revenue below the consensus estimate, shares added 6.8% in Wednesday’s trading session and traded up another 1.4% late Thursday morning.

Uber posted a big profit beat last night (EPS of $0.44, vs. a consensus estimate calling for a loss of $0.33 per share) while exceeding year-ago quarterly revenue by nearly 83%. Uber also provided lower-than-expected guidance, and the stock traded up nearly 4% Thursday morning.

The year-over-year revenue increases are especially noteworthy. For Lyft, active riders totaled 18.7 million, up 49% year over year, with new riders up 42%. Monthly active platform consumers totaled 118 million, up 27% year over year, and the number of trips taken increased by 23% to 1.8 billion.

Instead of hauling a lot more people around, Uber hauled more stuff. Its delivery segment generated positive adjusted EBITDA for the first time. Delivery gross bookings totaled $13.4 billion (slightly more than half of $25.9 billion in total bookings) with growth of 34% on top of 130% growth in the year-ago quarter. As the impact of the Omicron variant of COVID-19 decreases, Uber’s ridership is picking up again, with January’s total up 25% over December’s.

Here’s how several analysts reacted to Lyft’s earnings.

BTIG Research reiterated its Buy rating on the stock and raised the price target from $65 to $75. Noting the lower guidance, the analyst said that there could be some “pushback around the magnitude of Q1 downside, but we don’t see anything thesis-changing here.”

Citigroup reiterated a Buy rating while lowering the price target from $95 to $78, attributing the lower target to “lower [revenue] estimates and a modestly higher DCF discount rate.”

Credit Suisse maintained its Outperform rating and raised its price target from $70 to $71, citing “a large, fragmented, and underpenetrated addressable market of $745b,” among other things.

Susquehanna Bancshares reiterated a Positive rating while lowering the price target from $80 to $54. The analyst wrote that the firm continues to “believe LYFT could be poised for a big 2Q and 3Q as Omicron winds down and the weather warms up for more bikes and scooter rides.”

Other brokerages weighing in on Lyft included Wolfe Research (reiterated Peer Perform, lowered target from $46 to $45); Morgan Stanley (reiterated Equal Weight rating, lowered target from $67 to $64); Barclays (reiterated Equal Weight rating, lowered target from $59 to $47); UBS (reiterated Buy rating, raised target from $46 to $50); and Wedbush (reiterated Outperform rating, lowered target from $77 to $50).

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Here are some reactions to Uber’s report.

BTIG reiterated its Buy rating and lowered its price target from $80 to $65. One comment of note: “With green shoots already showing in rideshare, commentary supporting $1B+ of EBITDA for the year, and freight transitioning from a model plug to a real contributor, we expect a positive reaction.”

JMP Securities reiterated a Market Outperform rating and lowed the price target from $80 to $69. The analyst wrote: “We believe Uber today is structurally advantaged as it uniquely offers multiple services.”

Mizuho Securities reiterated a Buy rating and a price target of $72. The brokerage kept Uber on its list of top picks for this year.

Wolfe Research reiterated an Outperform rating and raised the price target from $55 to $57. Rapid recovery from the Omicron-driven downturn and positive comments from management on ridership and delivery volumes led the analyst to conclude, “Overall, UBER’s fundamental outlook is healthy early in FY22.”

Other brokerages weighing in on Uber included Canaccord Genuity (reiterated Buy rating, lowered target from $75 to $65); BofA Securities (reiterated Buy rating, raised target from $53 to $55); and Truist (reiterated Buy rating, lowered the target from $70 to $65).

Now delivering Eats.
And Don’t Eats.
Please, don’t get them mixed up!#UberEats #UberDontEats @JENCOOLIDGE @Trevornoah @GwynethPaltrow @nicholasbraun pic.twitter.com/Bl4ILIrhpR

— Uber Eats (@UberEats) February 8, 2022

In the noon hour Thursday, Lyft stock traded down 4.2%, at $42.16 in a 52-week range of $33.94 to $68.28. Shares had traded up about 3.4% earlier in the day.

Trading in Uber stock was halted for about 20 minutes in the morning for news. The stock traded up by about 3.8% before it was halted and slid to a loss of about 4.9% when trading resumed. At its investor day presentation, Uber said it expects to be cash-flow positive by the end of this year and sees adjusted EBITDA of $5 billion by 2024, with gross bookings rising to $165 billion to $175 billion over the same period. The EBITDA projection may be indicating slower growth. The current average 2022 EBITDA estimate from 37 analysts is $1.41 billion rising to $3.59 billion in 2023.

Halfway through the noon hour, Uber shares traded down by about 3.3%, at $38.86 in a 52-week range of $32.81 to $64.05.

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