Lyft has fallen more than 20% since its IPO — here's what the first Wall Street analysts to cover the stock are saying

Noam Galai/GettyLyft CEO Logan Green.

Lyft’s stock hasn’t had a good run since it debuted on Friday.

After opening near $US87 per share, the stock has sunk below $US70 in trading by Tuesday.

Still, the few Wall Street analysts have begun to initiate coverage of Lyft are still markedly bullishMost of the outlooks are positive, citing a huge market for ride-hailing and a company that’s still very quickly growing.

Here’s which Wall Street analysts have picked up the stock so far and what they’re saying:

D.A. Davidson: Rating: Buy; Price target: $US75

Becky Peterson / Business InsiderLyft’s investor meeting in San Francisco on its IPO roadshow was met by protests from angry drivers.

Tom White, an analyst at D.A. Davidson, was the first to launch coverage of Lyft on March 19.

In his initiation, White pointed toward a massive societal shift to what he’s calling “transportation-as-a-service,” or TaaS (an homage to Software-as-a-service, or SaaS).

“Our BUY rating reflects LYFT’s impressive recent U.S. market share gains and momentum, the continued growth/expansion of the broader Ridesharing market, and the stock’s reasonable EV/Sales multiple,” he said in a note to clients.

According to White, Lyft has boosted its market share in the US from 22% to 39% in the past two years. That’s at least in part thanks to Uber’s disastrous 2017, when the #deleteUber campaign helped Lyft nab some users from the competitor. It even acknowledged those gains in its public filing earlier in March.

Of course, there are also risks: “It remains unclear whether Lyft can be profitable as the #2 player in U.S. ridesharing, while still paying its drivers,” White said.

Wedbush: Rating: Neutral; Price target: $US80

Graham RapierLyft CEO Logan Green departs New York’s St. Regis hotel after meeting with a packed room of investors.

Like Davidson’s White, Daniel Ives of Wedbush points to massive growth in the transportation sector as a whole in setting his $US80 price target for shares of Lyft.

“The ridesharing industry has become one of the most transformational growth sectors of the US consumer market over the past five years with Lyft establishing itself as a clear #2 player behind the worldwide leader Uber,” Ives said in a note to clients on Wednesday.

Ives said Lyft has a “golden opportunity” in the $US1.2 trillion transportation market, where US consumers spend $US95 billion annually on public transportation.

“We think ultimately saying that the full amount of consumer spend being disruptable is a bit disingenuous but also doesn’t mean that the opportunity isn’t massive,” Ives wrote. “The full amount is disrupted would mean consumers stop spending on cars completely.”

That opportunity, however, doesn’t come without competitive pressure from Uber, which could be as much as five times larger than Lyft when it goes public later this year.

“There are also a number of risks/uncertainty that we see in the crystal ball for Lyft including: competitive pressures, lack of a path to profitability in the near-term, regulatory uncertainty, and positioning within the next generation autonomous driving arms race,” Ives said.

Morningstar: Economic moat: Narrow

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Morningstar, traditionally a more conservative sell-side firm, has the highest valuation yet for Lyft’s yet-to-trade stock – a total market cap of $US24 billion – but said the company’s economic moat may be smaller than investors may want.

“Lyft warrants a narrow economic moat and a stable moat trend rating, thanks to the network effect around its ride-sharing platform and intangible assets associated with rider, rides, and mapping data, which we think can drive Lyft to profitability and excess returns on invested capital in the future,” the analyst Ali Mogharabi said in a note to clients earlier this month.

Like others, Morningstar points to a well-rounded network of transportation options inside the Lyft app. The company’s acquisition of Motivate gave it the upper hand on Uber, whose Jump Bikes are in a smaller footprint compared with Motivate, which operates in most major US cities.

“In contrast to Uber, Lyft is not focused on food transportation or logistics,” Mogharabi said. “We like Lyft’s relatively narrower focus on consumer transportation but still note that Uber has an edge on Lyft in terms of an earlier start, higher market share, and a stronger network effect around its service. “

This list will be updated as more analysts launch coverage of Lyft.

Guggenheim Partners: Rating: Neutral; Price target: n/a

Jake Fuller, of Guggenheim Partners, says there are still too many unknowns with Lyft to fairly value the stock. Therefore, he’s sticking with a neutral rating and no price target.

“We understand the excitement around LYFT given a large total addressable market (TAM) and low penetration, positioning along the front lines of a shift in how we think about transportation and, of course, strong topline growth,” he told clients in a note Monday.

“That said, we simply have to look too far out with too many big assumptions in order to make a case for the stock.”

Among the key issues for Fuller are Lyft’s path to profitability, sustainability of revenue growth, bikes and scooters, and self-driving cars.

“We like a big TAM as much as anybody, and might be more inclined to revisit the rating if we could gain comfort on three fronts:” he said.

“1) Continued take-rate expansion which could yield better-than-expected topline growth and put upward pressure on estimates;

“2) Quicker-than-expected progress on margin without ceding share or growth;

“3) A more detailed (or any detail for that matter) explanation of how LYFT expects to work towards long-term margin objectives.”

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