Shares of ride-hailing firm Lyft and food-delivery firm DoorDash saw a significant increase on Monday following positive comments from Wall Street analyst Brad Erickson of RBC Capital Markets.
Analyst Upgrade and Price Targets
Erickson upgraded both Lyft and DoorDash stock to Outperform from Sector Perform, while also raising the price targets to $23 and $175 respectively, up from $17 and $130.
Market Performance
On Monday morning, Lyft shares rose by 6.1% to $17.34 while DoorDash stock was up by 3.7% to $132.17. In comparison, the S&P 500 index experienced a marginal decline of 0.1%.
The Potential Opportunity
“We do not believe DASH would buy LYFT, however, we see an opportunity to work together vs. a common competitor that could create significant value for both,” Erickson mentioned in his report. This common competitor refers to ride-sharing giant Uber Technologies, which also operates in the food delivery sector through Uber Eats.
Familiar Grounds
DoorDash has notable connections to Uber, with three of its top executives – Chief Operating Officer and President Prabir Adarkar, Chief Financial Officer Ravi Inukonda, and Chief Business Officer Keith Yandell – having previously worked at Uber. Despite Uber’s significantly larger market capitalization of $161 billion, DoorDash remains competitive.
Remarkable Stock Performance
Both Lyft and DoorDash stocks have shown impressive growth, surging by 68% and 128% respectively over the past 12 months.
Lyft’s Latest Earnings Report
Lyft’s recent earnings report received some attention due to a typo in the press release, creating confusion about the company’s 2024 margin expansion outlook. Despite this, the fourth-quarter financial results were robust with a notable increase in gross bookings.
Confidence in Lyft’s Future
According to Erickson, Lyft’s improved business execution instills confidence in potential partners for long-term sustainability and competitiveness.
Positive Results from Doordash
Similarly, DoorDash reported better-than-expected financials in February, with a notable surge in gross order volume. Erickson believes that a potential partnership with DoorDash could be on the horizon as Lyft establishes stability compared to UBER.
Existing Partnerships and Potential Opportunities
Lyft already has a partnership with Grubhub, offering benefits to Lyft Pink members such as free years of GrubHub+. Erickson hints that this may not be an exclusive partnership, potentially paving the way for future collaborations with DoorDash.
Conclusion
While DoorDash declined to comment and Lyft did not respond immediately, the potential for fruitful partnerships and growth opportunities remains promising in the competitive landscape.