Lyft stock gains after upgrade at Piper Sandler

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Shares of Lyft Inc. are up 2.6% in premarket trading Monday after Piper Sandler analyst Alexander Potter upgraded the stock to overweight from neutral. “First, while ridership remains depressed due to COVID, LYFT has nonetheless demonstrated an improving ability to extract revenue from each incremental mile traveled in the United States,” Potter wrote. “Second, recent regulatory developments have benefited companies that employ gig-based drivers.” Those positive regulatory dynamics along with Lyft’s improved cost controls could spur earnings upside for the company, in his view. Potter expects “post-vaccine” operating leverage for Lift, since its cost-cutting moves have allowed the company to deliver improving earnings before interest, taxes, depreciation, and amortization even though revenue is declining due to the pandemic. He notes that Lyft shares currently trade at a discount to Uber Technologies Inc.’s shares, “despite easier comps, less competition, and faster growth.” He upped his price target to $61 from $39. Shares have gained about 7% so far this year as the S&P 500 has risen 15%.
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