The shares of the San Francisco ride-hailing company finished 0.1% higher at $46.40. They had traded up as much as 3.1%. The $70 target indicates 51% upside from Wednesday's close at $46.35.
Lyft's second-quarter results were "robust," but investors have soured on the shares for a number of reasons, an analyst team led by Lloyd Walmsley said in a Sept. 5 report.
Those issues include an early end to the lockup on the shares from the company's March initial public offering; uncertainty regarding California legislation; investors becoming less interested in unprofitable companies trading on revenue multiples; and concern about whether "ride sharing is a good business," the analysts said.
The Deutsche team said the lockup issue has been priced into the shares, and the California-legislation impact has been "overblown" since in the worst case, Lyft would raise prices, they said.
California legislators are proposing to classify ride-hailing drivers as employees rather than as independent contractors not entitled to full benefits, which is how the companies see them.
The concerns have created an attractive entry point on the stock; the addressable market is large -- particularly with the development of autonomous vehicles -- drivers and riders are getting fewer subsidies on pricing, insurance costs are lower, and ride-hailing technology is becoming more efficient with better match rates and shared rides, Walmsley's team said.
What could go wrong? The possibility that California's proposed reclassification rules could go national; the prospect of higher federal minimum wages; and "anti-tech/gig economy presidential politics," they said.