Wells Fargo expects 11% q/q GBs growth at Lyft; Stock reaffirmed at Equal Weight

On Monday, Wells Fargo reiterated its Equal Weight rating on shares of Lyft (NASDAQ:), maintaining the price target at $18.00.

The firm’s analysis suggests that Lyft may increase its second-quarter and full-year 2024 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) guidance to between $100 million and $120 million, and approximately $400 million, respectively.

In the first quarter of 2024, Lyft’s 10-Q filing indicated a one-time cost of $27 million, which implies a normalized EBITDA of $86 million, compared to the reported $59 million. This adjustment reflects a more favorable earnings outlook than initially reported.

The firm anticipates Lyft to report second-quarter Gross Bookings of approximately $4.1 billion, which would represent an 11% quarter-over-quarter increase. This projection is based on the higher end of Lyft’s guidance. With a consistent contribution margin of 41.5%, the expected growth in Gross Bookings could yield an additional $58 million in contribution profit quarter-over-quarter, starting from a normalized EBITDA base of $86 million.

Despite the likelihood of increased spending in sales and marketing, operations, and fixed expenses in the second quarter, Wells Fargo projects that Lyft’s EBITDA could still surpass $120 million.

InvestingPro Insights

As Wells Fargo maintains an Equal Weight rating on Lyft (NASDAQ:LYFT) with a price target of $18.00, it’s worth considering some additional metrics and insights from InvestingPro. Lyft’s market capitalization currently stands at $6.3 billion, reflecting the company’s substantial scale in the ride-sharing industry.

InvestingPro data indicates a notable revenue growth of 10.9% in the last twelve months as of Q1 2024, with a more pronounced quarterly increase of 27.65% in Q1 2024. This growth trajectory aligns with Wells Fargo’s expectation of Lyft’s second-quarter Gross Bookings reaching around $4.1 billion. It’s also worth noting that the gross profit margin for Lyft was 32.58% in the same period, which may support the firm’s anticipation of a higher normalized EBITDA.

An InvestingPro Tip that is particularly relevant to the article is that analysts have revised their earnings upwards for the upcoming period, with 12 analysts indicating a more optimistic outlook. This consensus could underpin Wells Fargo’s projection of an increase in Lyft’s EBITDA guidance for the second quarter and full year.

For readers looking to delve deeper into Lyft’s financial health and future prospects, InvestingPro offers additional tips and insights. In fact, there are 10 more InvestingPro Tips available, including expectations of net income growth this year and the anticipation of sales growth in the current year. These insights can provide a more comprehensive understanding of Lyft’s financial position and market potential.

To access these valuable insights, investors can visit https://www.investing.com/pro/LYFT and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This exclusive offer can help investors stay ahead with real-time data and expert analysis.

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