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Photo of a carpool driver sharing the Lyft and Uber stickers on his windshield in downtown Los Angeles.
AP Photo | Richard Vogel
HSBC increased its ratings for Uber and Lyft on Monday, saying it expected a rise of 32 percent in the first and nearly 35 percent in the second.
"We believe that regulatory concerns have a say, as we continue to consider many options for improving Uber and Lyft products," HSBC analyst Masha Kahn said in a statement. note to investors.
Uber and Lyft grew approximately 1% in pre-market trading from last year's closing of $ 33.25 per share and $ 46.10 per share, respectively.
Both stocks have reduced their value by almost 25% over the past three months, "with investor sentiment more dismal than ever due to significant losses, regulatory losses, California regulatory headlines, and concerns over the slowdown in investment. growth, "Kahn said. Due to the recent downturn, HSBC has taken the unusual step of reducing its price targets for companies while improving its ratings. HSBC raised its price target for Uber to $ 44 per share from $ 49 per share and Lyft to $ 67 per share from $ 67 per share.
Overall, HSBC believes that carpooling activity and food delivery service can become profitable for both companies. The company quotes two foreign companies as an example, citing Yandex Taxi, a Russian car pooling company, and Meituan Dianping, a Chinese food delivery service, among the most profitable companies.
"We believe that Uber and Lyft passenger carriers can achieve profitability if both withdraw from sales and marketing and exploit the fixed cost base," Kahn said. "With regard to transportation and food delivery globally, we only see room for two major players and we expect further consolidation in both sectors."
Despite the upside potential, HSBC continues to suffer headwinds in the form of "higher regulatory risk and a longer-term, lower growth outlook for their Wrinkle business," said Kahn.
– CNBC Michael Bloom contributed to this report.
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