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Uber and Lyft shares rallied this year. There may not be much left to drive them higher, analysts say.

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Shares of Uber Technologies Inc. and the ride-hailing giant’s smaller rival, Lyft Inc., have sprinted higher this year. But analysts on Friday suggested there might not be much left in the tank for either stock heading into 2024.

Nomura analysts Anindya Das and Masataka Kunugimoto on Friday downgraded Uber
UBER,
-2.49%

to a neutral rating from buy, arguing that most of the things that could drive the stock higher are already baked into the price. They also downgraded Lyft
LYFT,
-3.54%

to their equivalent of a sell rating from buy, saying the company failed to fully capitalize on the travel industry’s post-pandemic recovery.

Shares of Uber, which closed out the year up 142%, were down 2.5% on Friday. Lyft’s stock gave up 3.4% and finished 2023 up 34.8%.

Uber, the analysts said, had managed to grow this year while occasionally turning a profit, and consolidated its grip on the ride-sharing markets in the U.S. and Canada. Meanwhile, Lyft, they said, had stumbled in its efforts to take advantage of the travel rebound after pandemic restrictions eased, cutting more staff this year after doing the same in 2022.

After years of losing money, they said Uber’s stronger financials this year allowed it to refinance its debt at a lower interest rate and extend the terms of that debt. They noted the company recently joined the S&P 500 Index
SPX
and that the market is expecting more stock buybacks from the company, as well as interest-rate cuts by the Federal Reserve next year.

“Thus, most of the milestones and catalysts that we were anticipating to boost Uber’s stock value have been largely met,” they said.

They added: “At this time, we think most of the catalysts for the stock are already priced in, and Uber is fairly valued at the current price. We therefore downgrade it to Neutral from Buy.”

Lyft has tried to cut its prices to compete with Uber, and has held off on expanding into areas like food delivery. But as travel demand settles, the analysts suggested, the advantages would still flow to its archrival.

“We expect 2024 to be more of a ‘normal’ year, in terms of people’s propensity to travel,” the analysts said. “Once the current rebound in travel subsides, we think Lyft’s subscale market positioning, and lack of cross-selling opportunities (unlike Uber), could constrain topline growth for the company.”

“Offsetting a more moderate pace of ridership growth by raising prices would be challenging for Lyft,” they said, “as we think it would be bound by the actions of its larger and more profitable peer, Uber.”

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