This Analyst Just Downgraded LYFT Stock. Here's Why.

In a recent research note, Guggenheim analyst Michael Morris downgraded Lyft's stock to Neutral and reduced his price target to $16, indicating a lack of significant upside from current levels. The analyst explained that this downgrade stems from cooling demand and the absence of a catalyst to boost sentiment in the near term. Lyft's second-half estimate for ride growth has been cut to 10.6%, down from the 11.9% consensus, and the analyst projects a further reduction to 10.3% for 2027, citing saturation in North America.

With U.S. growth expected to level off, Morris slashed Lyft's valuation multiple on estimated 2027 EV/OIBDA from 11x to 8x.

While focusing on the domestic ride market, Guggenheim also raised concerns about operational risks tied to Lyft's expansion efforts and capital allocation. The firm highlighted the lack of a disclosed impact of the acquisition of FREENOW, as the company absorbs these foreign assets. Despite the positive strategic milestones, such as expanding its partnership with Waymo in Nashville and collaborating with DoorDash (DASH) in Canada, the analyst believes that autonomous vehicle scale is still too early-stage to contribute significantly to Lyft's performance.

To preserve financial flexibility for ongoing M&A and balance sheet support, Morris now expects Lyft Inc to buy back around $500 million worth of its stock, a decrease from his previous estimate of $548 million.

The consensus rating for Lyft remains Moderate Buy, with the mean price target of $19.83, suggesting a potential upside of nearly 30% from the current levels. However, it is important to note that the analyst behind this downgrade was not holding any positions in Lyft or other mentioned securities at the time of writing.