Lyft (NASDAQ:LYFT) is stepping into the autonomous vehicle (AV) spotlight with its first partnership with Alphabet Inc.’s (NASDAQ:GOOGL) (NASDAQ:GOOG) Waymo, aiming for profitable rides from day one while challenging Uber’s (NYSE:UBER) dominance and positioning itself for accelerated growth.
Benchmark analyst Daniel L. Kurnos maintained Lyft with a Buy and raised the price forecast from $20 to $26. Kurnos argued that the company’s first partnership with Waymo marks a breakthrough in the rideshare and autonomous vehicle space.
The analyst said the deal ended Uber’s perceived monopoly and elevated Lyft into the serious AV conversation. He emphasized that this milestone strengthened Lyft’s credibility and supported his first outlined thesis when upgrading the stock in January.
Also Read: Lyft Is Executing Well But Analysts Caution About Uber And Waymo Competition
Kurnos highlighted three key components of the Waymo deal. First, Lyft expects it to be profitable per ride from day one and margin-accretive in the market due to Flexdrive and fleet management.
Second, Lyft launched in a market where Waymo already leads with first-party supply, allowing the two companies to test a dynamic supply algorithm that should spotlight utilization rates.
Third, Lyft will spend $10–15 million in capital expenditures for the facility but expects a quick payback period. The analyst noted this partnership differs significantly from other public collaborations and will be closely watched.
Turning to regulation, he said pending California legislation could save Lyft hundreds of millions in insurance costs. Kurnos cautioned, however, that while CEO David Risher mentioned $200 million, that number was only an approximation.
The analyst believes Lyft intends to pass most of the savings to riders through lower prices, spurring demand and scale benefits, rather than flowing directly into EBITDA. Lyft currently spends about $6 per ride on insurance in California, he said.
Kurnos also dissected consensus estimates. The analyst said Wall Street appears overly optimistic on revenue while underestimating the potential from Lyft Media and insurance renewals.
He projects Lyft will generate around $24 billion in gross bookings and $900 million in EBITDA by 2027, compared with Street expectations of $25 billion and $830 million, respectively.
Kurnos believes Lyft Media alone could add significantly more than the $265 million currently modeled, bringing the company closer to its $1 billion EBITDA target.
The analyst said Lyft has already exceeded expectations and remains one of his best ideas despite challenges ahead. He argued that bears underestimate assets like FreeNow, which he believes could evolve internationally into a strong growth engine.
For fiscal year 2025, Kurnos projects $6.37 billion in revenue and an adjusted EPS of $1.18.
Price Action: LYFT stock is trading higher by 0.05% to $22.59 at last check Monday.
Read Next:
Photo by Volodymyr Plysiuk via Shutterstock
