There is nothing to worry about at ride-sharing perennial also-ran Lyft (LYFT), at least, as far as CEO David Risher wants you to know. The consumer is still booking rides, Lyft is sufficiently flush with cash that it plans share buybacks, activist investors are pulling back on their campaigns, and analysts are oddly happy. This sheer avalanche of good news has investors cheering, and sent shares blasting up over 22% in Friday afternoon’s trading.
The news started out better than most anyone would have seen coming, with the earnings report. With gross bookings up a healthy 13%, reaching $4.16 billion—and also beating out the analyst estimates calling for $4.15 billion—things were looking up. That was about all Lyft needed to hear, and thus, it ramped up its fund for stock buybacks fully 50%, going from $500 million to $750 million.
And that also caught the attention of Goldman Sachs analyst Eric Sheridan, who has a five-star rating on TipRanks. Sheridan upgraded Lyft from Neutral to Buy after the results came out, and also boosted the price target to $20 per share, up slightly from its previous level of $19. Basically, Sheridan noted, Lyft’s earning power for the next two to three years is “dislocated” from current share pricing. There will also likely be further partnerships with autonomous vehicle operators, as well as fleet owners, which should help bolster the bottom line as well.
Engine Capital Calls it Quits
And, with such an array of good news set before it, Lyft also saw an activist investor pull back on the activism a bit. Engine Capital revealed that it was no longer going to be an activist investor at Lyft, thanks to the 50% boost in the stock buyback fund announced previously. Engine Capital withdrew its slate of board nominees, and pretty much cut off plans to be anything more than just a regular investor.
Engine Capital, oddly, was also urging Lyft to “consider strategic alternatives,” up to and including a sale. There is no word on whether that is is still in play, though given what we know, Engine Capital likely pulled that concept off the table as well.
Is Lyft Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on LYFT stock based on six Buys, 22 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 7.01% loss in its share price over the past year, the average LYFT price target of $15.93 implies 0.47% downside risk.
