Lyft (LYFT) stock is trading higher Friday after the ride-sharing company provided its 2027 financial targets at its first Investor Day.
In the presentation, Lyft said it expects a compound annual growth rate in gross bookings of approximately 15% between 2024 and 2027 and an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin of approximately 4% on a full-year basis in 2027.
The company also anticipates a free cash flow conversion of more than 90% as a percentage of adjusted EBITDA annually each year between 2025 and 2027.
"Over the last year, we've transformed our business and established a strong foundation for improving profitability and cash flow," said Erin Brewer, chief financial officer at Lyft, in a statement. "The financial targets we are announcing today reflect our expectations of healthy top-line growth and margin expansion as we deliver on our strategic priorities. I'm excited about Lyft's next chapter as we continue building a financially healthy and customer-obsessed Lyft."
The company also reaffirmed its outlook for the second quarter and full fiscal year, which it provided in its first-quarter earnings report last month.
"Lyft's customer-obsessed strategy is working," Lyft CEO David Risher said in the company's Investor Day press release. "Our execution keeps getting better, we're delivering industry-leading innovation, and we are working closely with partners to create great shared customer experiences."
Is Lyft stock a buy, sell or hold?
Wedbush analyst Scott Devitt attended Lyft's Investor Day presentation. "We are encouraged by the strength of the outlook, though we recognize that there is execution risk given the multi-year nature of the guidance and uncertainty related to macro and competitive dynamics over an extended time horizon," Devitt writes in a note to clients.
However, Devitt maintained a Neutral (Hold) rating on Lyft stock and recommended investors "allocate to Uber (UBER) for category exposure." However, the analyst did raise his price target on the industrial stock to $19 from $18.
Overall, most analysts are bullish toward Lyft. According to S&P Global Market Intelligence, the consensus analyst target price for LYFT stock is $19.51, representing implied upside of more than 20% to current levels. Meanwhile, the consensus recommendation is a Buy.
