Lyft Shares Off as Stifel Mulls Unclear Path to Recovery for Ride Hailing

Lyft shares were cut to hold at Stifel on what the investment firm says is likely to be a "slow and uncertain path to recovery" for ride hailing.
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Lyft  (LYFT) - Get Report shares fell on Monday after Stifel downgraded the stock days after the ride-hailing company's results topped analysts' first-quarter estimates.

Stifel analysts cut the stock to hold from buy and lowered their price target on the San Francisco company to $35 a share from $38. 

The new target indicates less than 7% upside from the stock's Friday closing price of $32.73. 

The San Francisco ride-hailing company's shares at last check were off 6% at $30.76.

"In reviewing our investment case for Lyft, we are challenged to continue to recommend shares at this time given the likely slow and uncertain path to recovery for the domestic ride-hailing market," said analyst Scott Devitt. 

While Lyft was able to top analyst estimates last week, the company did say that rides were down 75% year over year for the month of April, including a 70% decline in the last week of the month. 

While Lyft still expects stabilization and improvement from April levels, the company still forecasts revenue declines of 62% for the second quarter and 28% for the third quarter, both from a year earlier. 

Stifel says it is cautious on the company's rate of recovery and will be monitoring ride-hailing trends to see whether consumer demand is changing.

"We continue to support the company given secular growth trends, profit generation potential, and an innovation-focused team," Devitt said. But the shares "are more fairly balanced on a risk/reward basis given significant near-term headwinds."  

Despite the April slowdown, Lyft was still able to report revenue grew in the first quarter.

Lyft reported $955.7 million in total revenue, an increase of 23% year over year and higher than analyst consensus estimates calling for $882 million. 

Lyft posted a loss of $1.32 a share for Q1, versus a consensus estimate of a loss of $1.31.