Guggenheim has reduced its price target on Lyft to $22.00 from $26.00 while maintaining a Buy rating on the shares. The revised target is said to be closely aligned with InvestingPro's Fair Value assessment, which indicates Lyft may be undervalued at current levels. The stock has exhibited volatile intraday moves and is down 13% year-to-date, while analyst price targets span a wide range from $15.50 to $32.00.
The firm pointed to a slowdown in Lyft's ride growth as the primary driver for the change. Ride growth fell by 340 basis points even as gross bookings growth accelerated by 220 basis points in the fourth quarter. Management told Guggenheim that the decline in ride growth reflected "intentional tradeoffs" made to prioritize overall bookings during a period with elevated competitive promotions.
Despite the ride growth deceleration, Lyft has maintained 14.9% revenue growth over the last twelve months and, according to InvestingPro data, holds more cash than debt on its balance sheet. Executives expect a continued shift in mix toward luxury ride options, which management believes will create a pricing tailwind. They also anticipate volume benefits from California insurance reform to materialize in the second half of the year. Management reiterated confidence in guidance for gross bookings growth acceleration in 2026.
Guggenheim noted that its optimism about Lyft's outlook is supported by the company's actions on capital allocation, including an aggressive share buyback program, and by Lyft's return to profitability. The company reported a positive $0.36 diluted EPS over the last twelve months, signaling a sustained move into earnings territory after prior losses.
Looking further ahead, Lyft has restated its 2027 targets: $25.0 billion in gross bookings versus consensus of $24.3 billion; $1.0 billion in adjusted EBITDA versus consensus of $883 million; and more than $1.0 billion in free cash flow versus consensus of $1.2 billion. In response to recent developments, Guggenheim trimmed its 2026-2027 estimates for bookings, revenue, adjusted EBITDA, and free cash flow by single-digit percentages and reduced the target multiple applied to earnings to 13x from 17x previously.
Separately, Lyft reported fourth-quarter 2025 results that underscored the company's mixed performance. The firm delivered substantial profitability, with earnings per share of $6.72, well above the anticipated $0.1255. However, revenue for the quarter was $1.59 billion, short of the expected $1.76 billion. The result was characterized as a notable achievement in profitability but also a clear revenue shortfall.
Analysts have taken note of the earnings results, though no upgrades or downgrades from major firms have been reported to date. Following the earnings release, Lyft's stock rose modestly. The combination of record profitability and lagging revenue underscores the mixed nature of the company's recent performance and leaves investors and market watchers monitoring future quarters closely.
Context and implications
The adjustments from Guggenheim reflect both operational and valuation considerations. The ride growth decline - measured at 340 basis points - contrasts with improved gross bookings momentum in the quarter. Guggenheim's single-digit reductions to near-term estimates and its decision to lower the valuation multiple from 17x to 13x indicate that the firm has tempered some of its expectations for Lyft's rate of improvement while still recognizing the company's path to profitability.
Management's stated priorities - favoring total bookings amid intense promotion activity, shifting mix toward higher-priced ride options, and expecting regulatory changes to drive volume gains later in the year - frame the operating assumptions underpinning Lyft's guidance and investor expectations.
What to watch next
- Trajectories for ride growth and gross bookings in subsequent quarters, and whether the mix-shift toward luxury sustains pricing improvements.
- Timing and magnitude of volume benefits from California insurance reform, which management expects to materialize in the second half of the year.
- Execution on the share buyback program and continued delivery of profitability and free cash flow relative to the company's 2027 targets.