At last check Lyft shares were off 3% at $29.20. The $39 target indicates 34% potential upside in the shares.
The stock has dropped 46% since Feb. 11 as the coronavirus pandemic has decimated demand for rides.
The selloff "is overdone,” Kelleher wrote in a report. “The shares appear attractive at current levels.”
Lyft being smaller than Uber won’t prevent the No. 2 company from thriving, Kelleher said.
“Ridesharing is not a 'winner-take-all' industry,” he wrote. “The company has also invested sufficient capital in building out its technology infrastructure.”
Morningstar analyst Ali Mogharabi also has a positive view on Lyft.
“It has quickly emerged as the number two ride-sharing player, a position we think the firm will keep for years ahead,” he wrote in a report last month.
“The firm has successfully gained market share going head to head against the market leader, Uber.”
Mogharabi thinks Lyft has a narrow economic moat, “thanks to the network effect around its ride-sharing platform and intangible assets associated with rider, rides, and mapping data, which we think can drive Lyft to profitability and excess returns on invested capital in the future.”
But Mogharabi does say Lyft is at a disadvantage compared to Uber during the coronavirus pandemic. That's because Uber’s revenue is more diversified. He puts the fair value for Lyft shares at $50.