(Reuters) – Lyft Inc has a number of much-needed support on Tuesday, as analysts of banks which had worked on the ipo urged customers to buy the ride-hailing company’s beleaguered 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 10 of the banks, which Lyft audience gave a positive opinion on a stock that drops 30 percent from the opening price on 29 March, the first day of trading.
KeyBank appeared to be the only bank in the launch of the coverage on the Tuesday that is not recommend the purchase of Lyft, instead of assigning a “sector weight” rating and the risk of delay in growth.
As of Tuesday, 14 of the 22 analysts that Lyft recommended buying the stock, seven were “neutral” and a recommended sale price.
Lyft stock recession since the IPO has raised concerns about the valuation of larger rival Uber Technologies Inc, which is preparing on promoting his own long-anticipated public listing, expected next month.
Both companies have warned that they may never become profitable, making it difficult for investors to estimate how much they might be worth it.
“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 run,” JPMorgan analyst Doug Anmuth wrote in a research report, assigning Lyft a $68 price target. The stock was trading Tuesday afternoon at $60.79.
For Tuesday, only banks that had not worked on Lyft the IPO were allowed to make recommendations on the exchange, and the balance of opinion in that group was considerably more skeptical. Only four of them had recommended Lyft of the shares, 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 recommend the sale of that stock when they have their first opinions.
Also after Tuesday’s “buy” ratings, the stock baptized 0.5%.
Due to a lack of profitability, and dual-class share structure to ensure insiders control of the company, Lyft is not eligible to be included in the benchmark S&P 500 stock index. But if it was, the poor average analyst rating would rank in the bottom 10% of the reference index, between companies, including Kraft, Heinz Co and Gap Inc., according to Refinitiv data.
“We expect a continuous deceleration of the growth of the market and Lyft, the pace of the market share, and that seems likely to prevent the revenue and adjusted EBITDA a meaningful way that our expectations,” KeyBank analyst Andy Hargreaves.
Piper Jaffray expects “solid short-term top-line results,” says Lyft’s market share in the past quarters, but that the road to a positive net result would be a “multi-year journey.” It started with the coverage with an overweight rating and a price target of $78.
Most of the analysts were sure of Lyft on the long-term fortunes, despite the competition from Uber.
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.
Lyft has a market capitalisation of around $17 billion.
At least six of Lyft’s underwriters, including Canaccord, Cowen and JMP Securities are the back-Uber deal, according to SEC filings.
Reporting by Noel Randewich in San Francisco and Jasmine I S in Bengaluru; Editing by Bernadette Baum