Lyft may be falling behind competitor Uber, according to RBC Capital Markets. Analyst Brad Erickson downgraded shares of Lyft to sector perform from outperform, and slashed his price target, saying the ride hailing company appears to be struggling to gain an edge. “Our U.S. driver supply analysis makes our prior bullish thesis look increasingly less likely, prompting us to downgrade to Sector Perform,” Erickson wrote in a Friday note. “We believe UBER’s structural advantages are driving increased competitive intensity for LYFT where LT profit targets likely limit its ability to maneuver.” RBC dropped the price target to $16 from $30. The new price target represents about 16.8% upside from where shares closed Thursday at $13.70. Lyft fell 2.6% in the Friday premarket. Shares of Lyft cratered — down roughly 68% in 2022, and 76% off its 52-week high — as investors pivoted away from growth names. Competitor Uber is not faring as poorly, with shares about 29% lower this year and 39% off their recent high. RBC’s recent driver supply analysis, which found that Uber is reporting shorter pick-up times and cheaper prices than Lyft, could mean deeper problems for the latter company, according to the note. The analyst highlighted Los Angeles, where Lyft has significant exposure, as a “potential canary in the coal mine” to see how competition with Uber will play out. Meanwhile, the company’s margin targets could also limit Lyft’s efforts to regain market share. “While working towards profitability is, of course, a good thing in this new economic climate, we think it also has the potential to be a limiting factor for LYFT in the event it is finding rising competitive intensity,” Erickson wrote. —CNBC’s Michael Bloom contributed to this report.
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