Lyft Inc (NASDAQ: LYFT) ended in the green on Wednesday after a Gordon Haskett analyst said the beaten down stock could double from here.
Lyft shares have a 100% upside
It’s the first time that Robert Mollins has turned bullish on the ride-hailing company in more than a year.
On Wednesday, he said investors should buy Lyft shares as they have upside to $24 – about a 100% increase from where they closed the regular session this evening.
Down 75% for the year, Mollins dubs the stock attractive in terms of valuation. He’s bullish also since the Nasdaq-listed firm ended the third quarter with a record number of drivers that helped improve wait times by half a minute sequentially.
Lyft is also testing a new pay algorithm to attract more drivers. Better conversion rates was among other reasons cited for the “buy” rating.
Risk-reward remains favourable
A day earlier, the U.S. Department of Labour proposed a new rule to disable Lyft Inc from classifying its drivers as independent contractors. (find out more)
If adopted, that would mean higher costs for the San Francisco-headquartered company. Still, Mollins remains convinced the aforementioned tailwinds, including overly negative sentiment, suggest favourable risk-reward.
We see several catalysts to drive multiple expansion in the near-term. Any news (barring something terrible) would be welcomed.
He, however, continues to see Lyft shares as “disadvantaged” versus Uber.
Lyft is expected to publish its next quarterly report in early November. Consensus is for it to lost 37 cents a share versus the year-ago 55 cents a share loss.