Lyft received some badly needed support on Tuesday, as analysts at banks that had worked on its IPO urged clients to buy the ride-hailing firm’s beleaguered shares, Reuters reports.
Following the required 25-day wait for deal underwriters to issue an investment opinion following an IPO, at least 10 of the banks that brought Lyft public gave positive recommendations on a stock that is now trading far below its offer price, the report said.
Most of the analysts were confident of Lyft’s long-term fortunes, despite the competition from Uber.
Piper Jaffray expects “solid near-term top line results,” saying Lyft had been gaining market share in recent quarters, but that the path to positive net income would be a “multi-year journey.”
It initiated coverage with an overweight rating and target price of US$78.
Lyft shares closed at US$60.25 on the Nasdaq on Tuesday, having lost steam after a strong debut on March 29 when they soared as much as 23 percent from the IPO price of US$72.
KeyBank appeared to be the only bank launching coverage on Tuesday that did not recommend buying Lyft, instead assigning it a “sector weight” rating and warning of slowing growth.
As of Tuesday, 14 out of 22 analysts covering Lyft recommended buying the stock, seven were “neutral” and one recommended selling, according to Reuters.
Lyft’s stock slump since its IPO has raised concerns about the valuation of larger rival Uber Technologies as it prepares to promote its own long-anticipated public listing, expected next month.
Both companies have warned they may never become profitable, making it difficult for investors to estimate how much they might be worth.
Reuters has reported that Uber plans to sell around US$10 billion worth of stock at a valuation of between Us$90 billion and US$100 billion. Its IPO is on track for some time in May.
“Uber’s filing has added pressure, and we acknowledge that the upcoming roadshow could create more near-term uncertainty, but we believe Lyft continues to execute well,” JPMorgan analyst Doug Anmuth wrote in a research report, assigning Lyft a US$82 price target.
Before Tuesday, only banks that had not worked on Lyft’s IPO were permitted to offer recommendations on the stock, and the balance of opinion in that group was decidedly more skeptical.
– Contact us at [email protected]