Ride-sharing services Lyft (LYFT) - Get Report and Uber (UBER) - Get Report accelerated Monday after the stocks of both companies were upgraded to buy from hold at HSBC Global Research. 

Analyst Masha Kahn lowered the target price on each stock; Uber to $44 from $49 and Lyft to $62 from $67 "to reflect higher regulatory risks and a lower longer-term growth outlook for their rides businesses."

Yet, with both stocks down about 23% in the last three months, "we think regulatory concerns are priced in, whilst we continue to see a lot of optionality around product improvements for both Uber and Lyft," Kahn said in a note. 

Shares of Uber, which went public in May, were up 3.37% to $34.37 on Monday, while shares of Lyft, which went public in March, were up 4.15% to $48.02. Kahn noted both Lyft and Uber are down 40% and 18% from their respective IPO prices, and 19% and 7% in the last month.

"We believe both Lyft and Uber will have to address inefficient cost structures and focus on profitable growth," the analyst wrote. "Higher prices, lower subsidies and slower growth in bookings will likely be the new normal, but these changes should help reduce losses over the next several years. Private capital to fund 'growth at all costs' for Uber's competitors may not be as available going forward. In ride-hailing and food delivery globally we see room for only two large players and expect more consolidation in both sectors."