Shares of Uber Technologies Inc. and the ride-hailing big’s smaller rival, Lyft Inc., have sprinted increased this yr. But analysts on Friday steered there won’t be a lot left within the tank for both inventory heading into 2024.
Nomura analysts Anindya Das and Masataka Kunugimoto on Friday downgraded Uber
UBER,
to a impartial ranking from purchase, arguing that many of the issues that would drive the inventory increased are already baked into the worth. They additionally downgraded Lyft
LYFT,
to their equal of a promote ranking from purchase, saying the corporate failed to completely capitalize on the journey trade’s post-pandemic restoration.
Shares of Uber, which closed out the yr up 142%, had been down 2.5% on Friday. Lyft’s inventory gave up 3.4% and completed 2023 up 34.8%.
Uber, the analysts stated, had managed to develop this yr whereas often turning a revenue, and consolidated its grip on the ride-sharing markets within the U.S. and Canada. Meanwhile, Lyft, they stated, had stumbled in its efforts to reap the benefits of the journey rebound after pandemic restrictions eased, slicing extra employees this yr after doing the identical in 2022.
After years of dropping cash, they stated Uber’s stronger financials this yr allowed it to refinance its debt at a decrease rate of interest and lengthen the phrases of that debt. They famous the corporate not too long ago joined the S&P 500 Index
SPX
and that the market is anticipating extra inventory buybacks from the corporate, in addition to interest-rate cuts by the Federal Reserve subsequent yr.
“Thus, most of the milestones and catalysts that we were anticipating to boost Uber’s stock value have been largely met,” they stated.
They added: “At this time, we think most of the catalysts for the stock are already priced in, and Uber is fairly valued at the current price. We therefore downgrade it to Neutral from Buy.”
Lyft has tried to chop its costs to compete with Uber, and has held off on increasing into areas like meals supply. But as journey demand settles, the analysts steered, the benefits would nonetheless movement to its archrival.
“We expect 2024 to be more of a ‘normal’ year, in terms of people’s propensity to travel,” the analysts stated. “Once the current rebound in travel subsides, we think Lyft’s subscale market positioning, and lack of cross-selling opportunities (unlike Uber), could constrain topline growth for the company.”
“Offsetting a more moderate pace of ridership growth by raising prices would be challenging for Lyft,” they stated, “as we think it would be bound by the actions of its larger and more profitable peer, Uber.”
Source web site: www.marketwatch.com
