Ride-hailing competitors Uber (UBER) - Get Uber Technologies, Inc. Report and Lyft (LYFT) - Get Lyft Inc Class A Report were both in the spotlight on Wednesday after Uber agreed to classify its U.K. drivers as workers, and as Lyft made it to Wedbush Securities’ Best Ideas list with a price-target raise.
Uber on Tuesday said it will reclassify its U.K. drivers as workers, falling partly in line with a recent court ruling that will make roughly 70,000 Uber drivers entitled to an earnings guarantee, holiday pay and to automatic enrollment in a workplace pension.
The move came after Uber lost a court case last month challenging the requirements.
Lyft, meanwhile, made it onto Wedbush Securities’ Best Ideas list, with analyst Dan Ives raising his one-year price target on the ride-hailing company to $85 from $72 to reflect a stronger reopening trajectory into the second half of 2021 and 2022 as well as improved profitability, and long-term opportunities for stronger revenue per rider.
“We continue to believe the ridesharing stalwarts Uber and Lyft are well-positioned to see a springboard of consumer demand bounce back as a vaccine gets deployed to the masses by this summer and more start to return to the office and traveling rebounds significantly,” Ives wrote in a research note.
Both Uber and Lyft have been slammed by the COVID-19 pandemic, though analysts have been upbeat about Uber’s food delivery business, which has grown during U.S. economic lockdowns.
Lyft has experienced more of a struggle, though its stake in delivery service provider Essential Deliveries and other initiatives like car rentals, public transportation payments integration and preferred rides should position Lyft for success beyond simply being a reopening play, Ives said in his note.
“The profitability profile and leverage have essentially turned Lyft into a different company than it was pre-pandemic, as the company has significantly cut fixed/variable expenses across the board to shelter its business model during this Category 5 storm,” the analyst said.
At last check, shares of Uber were down 2.8% at $57.20. Shares of Lyft, meanwhile, were up 1.05% at $65.37.
Elsewhere, Wall Street was looking at a moderately higher open ahead of Wednesday's decision on interest rates from the Federal Reserve and news conference.