Lyft Inc. has a tough act to follow.
When the ride-hailing service announces fourth-quarter results after markets close Tuesday, investors and analysts will inevitably draw comparison to its larger rival Uber Technologies Inc. UBER, -1.53% . The market leader last week said it expected to report an adjusted profit in the fourth quarter of 2020 — ahead of its previous projection for sometime in 2021. Uber reported a narrower-than-expected loss in its fiscal fourth quarter, driving its shares up nearly 10% Friday.
See also: Uber stock turns higher on narrower-than-expected loss, prediction of profit by end of 2020
For Lyft LYFT, +7.61% , the pressure is on. Last month, it announced 90 layoffs in marketing and enterprise operations out of its 5,500-person workforce. “We’ve carefully evaluated the resources we need to achieve our 2020 business goals, and the restructuring of some of our teams reflects that,” Lyft said in a statement to MarketWatch.
The San Francisco-based company has lost about $2.25 billion the past three quarters, raising questions about its ability to turn a profit. Last year, Lyft Chief Executive Logan Green said it would be profitable by late 2021, if it excluded some costs.
See also: Lyft shares dip on reduction of 1.6% of workforce
Indeed, Lyft has its believers as it navigates to profitability.
RBC Capital Markets analyst Mark Mahaney, echoing the sentiments of other bullish analysts, sees a “greater chance of upside vs. downside variance, in part due to what we perceive to be improved industry conditions (less coupon/discount intensity).”
“We continue to view Lyft’s valuation as attractive at current levels, supported by the rising tide of Transportation-as-a-Service (TaaS, a potential > $1TN market),” Cowen analyst John Blackledge added in a Jan. 30 note that maintained an Outperform rating but reduced his price target to $78 from $84. “We expect the secular shift to continue, led by younger age groups who are around twice as likely to be Lyft MAUs (per our recent survey data) and increasingly likely to view services like Lyft as a car replacement.”
Lyft’s stock climbed 7.6% Monday after Northcoast Research analyst John Healy upgraded it to Buy from Neutral, and floated the possibility it “could be increasingly active from an M&A standpoint” as the race for autonomous-driving technologies accelerates. He added Uber’s recent quarter suggests “competitive dynamics and unit economics of the ‘ride business’ are sound.”
What to expect
Earnings: Of the 23 analysts surveyed by FactSet, Lyft on average is expected to post a loss of $1.38 a share, up from the $1.65-a-share loss expected at the beginning of the quarter. The company’s adjusted per-share loss is expected to come in at 53 cents.
Estimize, which crowdsources estimates from buy and sell-side analysts, fund managers, academics and others, is forecasting a loss of 45 cents a share, based on 63 estimates.
Revenue: Wall Street expects revenue of $984 million from Lyft, according to 30 analysts polled by FactSet. Lyft reported revenue of $670 million during last year’s fourth quarter, and a loss of $249 million, or an $11.37-loss-per-share. FactSet expected Lyft to report 22.8 million active riders.
Estimize is forecasting revenue of $1.001 bln million, based on 66 estimates.
According to FactSet data, of the 38 analysts who cover Lyft, 26 have buy or overweight ratings, 11 have hold ratings, and one has a sell rating, with an average price target of $65.79.
Stock movement: Lyft shares have retreated 36% since the company went public on March 29, 2019. Conversely, the broader S&P 500 SPX, +0.73% index is up 18% during the same period.
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