Analysts of Lyft underwriters say buy a falling stock

(Reuters) – Wall Street is the public opinion of Lyft Inc took a big turn for the positive on Tuesday, after analysts at many of the banks that worked on the ipo urged customers to buy the ride hailer the poorly performing shares.

The Lyft logo is seen on a parked Lyft Scooter in Washington, USA, March 29, 2019. REUTERS/Brendan McDermid

After the required 25 days to wait for the deal underwriters to make an investment opinion after an IPO, at least eight of the banks, which, Lyft public last month came out with positive recommendations on a share decreases by about 30 percent from the opening price on the first day of trading.

For Tuesday, only the banks that are not working of the deal were allowed to make recommendations on the exchange, and the balance of opinion among that group was considerably more skeptical. Only four of them had recommended Lyft as a “buy”, or the equivalent, while six started with the stock as a “hold” and one ” sell.”

Despite the rules that separate investment banking and research activities, it is rare for analysts of banks which have participated in an IPO to issue a bearish view on a stock when they make their first opinions.

Shares of Lyft rose 3 percent in trading before the bell, but increased only marginally soon after Wall Street is officially open.

“We still believe the company has more wood to chop to the credibility of the Street, but the sale of the press in the last few weeks seems to be abating,” said Daniel Ives, managing director, equity research at Wedbush Securities, who do not participate in the underwriting.

By the opening bell, at least 11 real estate brokers that have investment arms underwrote the deal, including Jefferies, JP Morgan and Piper Jaffray, had initiated coverage of Lyft with “buy” or equivalent “buy” ratings.

Piper Jaffray expects “solid short-term top-line results”, says Lyft’s market share in the past quarters, but believed that the path to the positive net result would be a “multi-year journey”. It started with the coverage with an overweight rating and a price target of $78.

On Monday, prices, Lyft had a market capitalisation of around $17 billion. Both it and Uber have warned that they may never become profitable, making it difficult for investors to estimate how much they might be worth it.

Most of the analysts were sure of Lyft on the long-term fortunes, despite the competition from the Uber on the AMERICAN streets and between the stock market investors.

“Uber filing of an added pressure, and we recognise that the next roadshow could make more in the near-term uncertainty, but we believe Lyft continues to perform well,” said Doug Anmuth, an analyst from JP Morgan.

Reuters has stated that Uber plans to sell for about $10 billion in shares at a valuation of between $90 billion and $100 billion. The IPO is on schedule for a time in May.

At least six of Lyft’s underwriters, including Canaccord, Cowen and JMP Securities are the back-Uber deal, according to SEC filings.

Currently 14 of the 21 analysts that Lyft rate the stock a “buy”, or stronger, seven, “neutral” and one recommends “sell”.

Reporting by Noel Randewich in San Francisco and Jasmine I S in Bengaluru; Editing by Bernard Orr

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