Uber and Lyft could break much earlier than Wall Street thinks

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Uber

and
Lyft

A title at Evercore ISI predicted that the two carpool companies could break even a year ahead of Wall Street forecasts.

The story back. The shares of Lyft (ticker: LYFT) and Uber (UBER) have experienced difficulties since their IPO.

Both are well below their introductory prices, although Wall Street is optimistic about their prospects. Lyft and Uber were stimulated by the industry's sense that US car-pooling competition has gradually tended to no longer outsource prices.

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An analyst at Susquehanna wrote earlier this week that Lyft would benefit more than Uber, because the former is focused solely on ridesharing in the US, compared to Uber's significant investment in global car pool growth and growth in food deliveries .

What's up. Evercore ISI analyst Benjamin Black is more optimistic about US carpool shares.

Black wrote Thursday in a note to his clients that Uber could break even before interest, taxes, depreciation and amortization (Ebitda) by 2022, a figure based on Wall Street's consensus estimate. It's the same for Lyft, which he also sees in the financial equilibrium of Ebitda in 2022.

"We see strong short-term catalysts for the revaluation of both stocks based on a significantly improved price environment, the maturing of incentives, and we expect profitability to be higher than that of consensus," writes -he. "After a clearly stormy start, we believe that increased training on the business model of carpooling involves multiple expansion."

He pointed to the increase in take-up rates (the reduction achieved by Uber or Lyft from each disc) in order to allow for a sustained expansion of Ebitda's margin.

Black pointed to Yandex's sudden profitability in Russia when Uber left Russia, illustrating how "carpooling companies can quickly become profitable".

He stressed that the US market is not a monopoly like Russia, but "an environment in which both play a" nice "role and compete on" brand and experience "and share flat, is a duopoly that behaves in the same way. "

He added that China, Didi, is facing its own challenges and "can not afford to promote forever."

Uber stock rose 2.7% to 43.24 dollars on Thursday, while Lyft's rose 3.2% to 60.25 dollars. The largest
S & P 500
the index was up 0.3%.

Look forward. Black started covering Uber and Lyft with Outperform.

It has a target price of $ 60 on the Uber stock, 39% more than the current price based on its "diversified growth on a scale" or "its platform as a product". He calls the Lyft stock the "absolute sharing game". a price target of $ 74, which implies a rise of 23%.

In this week's edition, Barron underlined our concerns about Uber and carpooling actions in general. While participation rates can contribute to profitability, they could also affect the growth of the sector. Then add questions about whether carpooling is really the future of mobility, and we are continuing our calls for investors to remain on the sidewalk for now.

Write to Connor Smith at [email protected].