Today is the last day of trading for the year, although it isn’t a positive one for Lyft (NASDAQ:LYFT). This morning, Nomura downgraded LYFT stock to “Reduce” from “Neutral” while also raising its price target to $13 from $11.7, marking an 11% increase.
Nomura analysts Anindya Das and Masataka Kunugimoto believe that 2024 will be a “normal” year for travel, which doesn’t bode well for the ride-hailing company. They added that once the current rebound in travel ends, Lyft could be hurt by its weak cross-selling opportunities and market position, unlike competitor Uber (NYSE:UBER):
“Offsetting a more moderate pace of ridership growth by raising prices would be challenging for Lyft, as we think it would be bound by the actions of its larger and more profitable peer, Uber.”
Nomura Downgrades LYFT Stock
On top of that, the analysts don’t believe that Lyft can further expand its take rate by much. Lyft’s take rate is the percentage of fees that it collects from its services. The pair is also bearish on the company’s bike-sharing operations as well.
On TipRanks, Anindya Das is ranked number 6,735 out of a total of 8,665 Wall Street analysts. He carries a 48% success rate and an average one-year loss of 2.1% for his stock picks. Masataka Kunugimoto does not have enough ratings data to evaluate properly.
Wedbush analyst Scott Devitt also recently chimed in on Lyft, reiterating his “Neutral” rating while raising the price target to $14 from $12. Like the Nomura analysts, Devitt emphasized that Lyft has a disadvantage when compared to Uber.
“Uber continues to leverage its scale as well as the benefits of its delivery business, leading to a stronger value proposition for consumers through its bundled rewards program, Uber One,” said Devitt.
Devitt added that Lyft’s new management is focused on taking market share while adjusting its prices to better compete with Uber. In the long term, Lyft should benefit from the increased use of ride-hailing services while participating in a duopoly with Uber.
Devitt is highly ranked at number 296 on TipRanks. He has a success rate of 53% and an average one-year return of 14.2% for his stock picks.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
