TD Cowen names ride-sharing service Lyft 'best smidcap idea', upgrades TP and rating

A TD Cowen analyst has named ride-sharing service Lyft his best mid- and small-cap idea for 2025. He just upgraded his rating to «buy» from «hold» and upped his target price, for upside of a third to the current market price. Among the reasons cited for the upgrade are Lyft's «customer obsession» and underappreciated autonomous vehicle rollout.

TD Cowen analyst John Blackledge raised his recommendation for Lyft from a «hold» to a «buy» yesterday, June 24, while raising his target price by more than 31% to $21 per share, as reported by CNBC. 

This caused the company's stock price to jump 6%, but even with that rally, the new target price still suggests upside of 32%. 

One catalyst for growth is «strong execution» from the current management team, says Blackledge. It has «refocused the company on ‘customer obsession’ and has rolled out multiple innovations to improve experience for riders & drivers (most recently Price Lock),» the latter allowing customers to lock in a price for their frequently traveled routes for a monthly fee to avoid paying extra during peak demand. 

Among other drivers Blackledge cited Lyft's growing focus on «tier 2» cities such as Charlotte and Indianapolis, as well as the April acquisition of European taxi app FreeNow for EUR175 million. He also mentioned Lyft's partnerships with other companies, such as food delivery service DoorDash. The partnership between them, signed in October, allows customers to save money on both services. 

In addition, investors are underappreciating the opportunity that autonomous vehicles provide for Lyft, Blackledge argues. The company plans to launch them as early as this year in Atlanta through its May Mobility partnership. Next year, it is set to launch Mobileye-powered autonomous vehicles in Dallas through its partnership with Japan's Marubeni. Recall Mobileye Drive is a comprehensive driverless system made by a subsidiary of Intel. 

«We think autonomous vehicles should expand rideshare [total addressable market] over the long-term, helping to drive new use cases such as serving riders who would prefer a driver-less trip,» CNBC quoted Blackledge as saying. 

Since the beginning of the year, Lyft is up almost 23%, but Wall Street analysts generally see further upside as limited. The most popular recommendation for the stock, made by 31 out of the 48 coverage analysts, is a «hold,» according to data from MarketWatch. Another 15 rate it a «buy,» and another two a «sell.» The average target price of $17.13 per share offers upside of 8% to current quotes.

The AI translation of this story was reviewed by a human editor.