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Lyft (LYFT) shares soared more than 20% on Friday after the ride-hailing firm reported a strong first quarter and increased its share repurchase authorization to $750 million.
In Q1, the mobility giant saw a 13% annualized growth in its gross bookings to $4.16 billion while the number of rides increased 16% on a year-over-year basis to 218.4 million – both ahead of Street estimates.
Including today’s gain, LYFT stock is up more than 60% versus its low in early April.
Goldman Sachs Upgrades Lyft Stock to ‘Buy’
Lyft is gaining at the time of writing also because David Risher, the company’s chief executive, told CNBC in an interview this morning that signs of a consumer slowdown haven’t surfaced yet.
Additionally, in the earnings release, the Nasdaq-listed firm said its ride bookings will increase by another 15% or so in the current quarter, indicating expectations of continued momentum.
That made Eric Sheridan, a senior Goldman Sachs analyst, lift his rating on the mobility company to “Buy.” On Friday, he revised the price target on Lyft shares as well to $20, indicating potential upside of another 25% from here.
Why Is Goldman Sachs Bullish on LYFT Shares?
According to Goldman Sachs, autonomous vehicle operators will increasingly team up with fleet owners over the next few years, which the investment firm believes will prove a meaningful, long-term tailwind for the likes of Lyft Inc.
In his research note, its analyst Eric Sheridan argued that a “rapid cadence of production innovation in consumer offerings and rising driver supply affinity” could help improve the company’s growth trajectory as well.
Sheridan is bullish on LYFT stock also because its valuation seems “dislocated from its earnings power in the next 2-3 years.”
Much of the Good News May Already Be Priced into Lyft
Investors should note that other Wall Street analysts are not as bullish on Lyft stock as Goldman Sachs.
The consensus rating on LYFT currently sits at “Hold” only with the mean target of a tad above $16 below its current trading price after today’s rally.
