By Emily Dattilo
Shares of ride-hailing companies Lyft and Uber Technologies were trading lower after one analyst team weighed in skeptically about the outlook for the businesses.
Nomura analysts Anindya Das and Masataka Kunugimoto downgraded Lyft to Reduce from Neutral but revised their estimates for earnings and revenue and raised their target for the stock price to $13 from $11.70 on Friday. They cut their rating on Uber to Neutral from Buy and raised their price target to $62 from $59 in a separate report.
Lyft stock was down 3.4% to $15.01 in premarket trading, while Uber shares dropped 1.5% to $62.20. Futures on the S&P 500 were flat.
The analysts said they “see limited room” for Lyft to continue raising take-rates — the portion of a fare it receives as commission — because drivers’ operating expenses are rising faster than their earnings. Separately, they also aren’t seeing opportunities for the company “to address the drag on earnings from its bikesharing business” in the immediate future.
The Nomura team expects the postpandemic surge in travel to settle next year, which may mean good things for Uber.
“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,” analysts wrote.
“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,” they continued.
Shares of Lyft have soared 32% in December and 41% this year. The analysts said that while growth stocks have generally benefitted from optimism that the Federal Reserve may begin to cut rates next year, they haven’t been able to find sufficient reason to explain the stellar monthly performance.
A different story is unfolding at Uber, whose stock has risen more than 150% this year. From “profitably scaling its business model” to posting its first operating profit to being added to the S&P 500 index to whispers of future share buybacks, analysts and investors have found much to like.
“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,” the analysts wrote.
Nomura’s perspectives on the competing ride-sharing companies are emblematic of Wall Street’s views. Lyft has Neutral ratings from 73% of the analysts who cover the stock, while Uber boasts a Buy-rating ratio of 94%, according to FactSet.
Write to Emily Dattilo at emily.dattilo@dowjones.com