Lyft called ‘best idea’ at Wedbush with 26% upside as Wall Street craves reopening plays

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The Lyft stock price rose after its Q4 earnings Mario Tama/Getty Images
  • Lyft was added to Wedbush’s “Best Idea List” as the ride-hailing company benefits from a reopening of the economy, according to a Wednesday note.
  • Wedbush raised its price target on Lyft to $US85 ($110), representing potential upside of 26%.
  • “We continue to see clear signs that Lyft is on the cusp of seeing a ‘springboard of consumer demand’ into 2H21 and 2022,” Wedbush said.
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Lyft is poised to benefit from pent-up consumer demand as the COVID-19 pandemic subsides and the economy reopens, according to a Wednesday note from Wedbush.

Wedbush added Lyft to its “Best Ideas List” and raised its price target to $US85 ($110) from $US72 ($93), representing potential upside of 26% from Tuesday’s close.

The price target increase is based on Wedbush’s expectations of a strong reopening trajectory into next year as the COVID-19 pandemic subsides, travel picks up, and workers return to the office, according to the note.

“We continue to see clear signs that Lyft is on the cusp of seeing a ‘springboard of consumer demand’ into 2H21 and 2022,” Wedbush said.

Wedbush also sees improved profitability and opportunities for stronger revenue per ride for Lyft.

“The profitability profile and leverage have essentially turned Lyft into a different company than it was pre-pandemic, as the company has significantly cut fixed/variable expenses across the board to shelter its business model during the category 5 storm,” Wedbush said.

Other services offered by Lyft could help boost incremental revenue per ride, like its essential deliveries initiative, which focuses on last-mile delivery. Rentals, preferred rides, and autonomous vehicles “should also position Lyft for success beyond simply being a reopening play,” the note said.

“In a nutshell, with a quicker trajectory to profitability and the Street craving for ‘reopening plays’, Lyft now finds itself on the precipice of a demand snapback into the rest of 2021 after navigating some dark days over the past year,” Wedbush concluded.

Shares of Lyft have rallied 32% year-to-date, and were up as much as 2% in Wednesday trades.