Lyft Inc. (NASDAQ:LYFT) posted strong third-quarter results, underscoring improvement in execution and operational discipline.
J.P. Morgan analysts, led by Doug Anmuth, raised their price forecast for LYFT to $22 from $16 while maintaining a Neutral rating.
The firm noted that Lyft crossed the $1 billion free cash flow mark for the first time, underscoring improved execution and disciplined cost control.
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Management expects continued growth in 2026, supported by new partnerships with United Airlines (NASDAQ:UAL) and Freenow, as well as contributions from the recent TBR acquisition.
Lyft’s third-quarter gross bookings rose 16% year-over-year to $4.78 billion, near the high end of guidance. Rides grew 15%, fueled by an 18% increase in active riders and double-digit driver-hour growth, analysts noted.
For the fourth quarter, the company guided to $5.01-$5.13 billion in gross bookings, implying 17-20% year-on-year growth and including a full-quarter contribution from Freenow.
Adjusted EBITDA for the quarter reached $139 million (2.9% of gross bookings), exceeding the mid-point of guidance.
Fourth-quarter EBITDA is expected to be between $135-$155 million, with margins expanding to up to 3%. The firm emphasized that FCF surpassed $1 billion on a trailing basis, with conversion expected to reach 150-175% in 2026 and 2027.
Lyft repurchased $200 million in stock during the quarter and is on track to complete its $500 million buyback by year-end. The Freenow acquisition is expected to add roughly EUR 1.0 billion to 2026 revenue, while the United Airlines MileagePlus partnership is expected to boost business travel demand and offset the loss of Delta’s tie-up.
Lyft’s autonomous vehicle (AV) strategy remains focused on building a hybrid partner ecosystem with Alphabet Inc.’s (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo, May Mobility, and Tensor (CRYPTO: TNSR/USD), expanding in the U.S. and Europe next year.
J.P. Morgan’s updated estimates lift 2026 and 2027 gross bookings forecasts by 1% and 2026 adjusted EBITDA by 2%. The firm projects 2026 revenue of $7.47 billion and EBITDA of $704 million.
The price forecast of $22 reflects a valuation of roughly 4.5 times Lyft’s projected 2027 free cash flow of $1.4 billion. The new target also implies about 7.0 times 2027 estimated EBITDA, representing a discount to industry peers that trade at around 18 times.
Analysts say the valuation discount is justified because Lyft remains a show-me story requiring stronger execution, and its category position and scale continue to trail rival Uber Technologies, Inc. (NYSE:UBER).
Price Action: LYFT shares were trading higher by 8.79% to $21.85 at last check Thursday.
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