Lyft (LYFT) is demonstrating strong core fundamentals, with improving ride metrics and margin expansion as recent investments in supply and product offerings drive demand and cost efficiencies, Oppenheimer said Friday in a research note.

The firm noted that Lyft is not seeing signs of consumer softness, with both active riders and trip frequency accelerating by 100 basis points compared to Q4. Active riders rose 11% year over year, while ride frequency climbed 5%. Lyft is also seeing more habitual use, with commuting now accounting for one-third of total rides.

Oppenheimer highlighted that investments in areas like black car services and price lock memberships are contributing to growth. Black car rides are growing roughly twice as fast as overall ride volume, and price lock memberships surged 21% quarter over quarter. While average fares declined sequentially, they remain modestly higher than the same period last year.

For Q1, gross bookings rose 13% year over year, 1% above Oppenheimer's estimate and in line with Street expectations. Revenue increased 14% year over year, 1% above Oppenheimer's estimate but 1% below consensus.

This was driven by better-than-expected gross bookings margins and leaner operating expenses, which grew just 4% year over year - a significant improvement from the previous quarter.

Looking ahead, Lyft guided to 12% year-over-year gross bookings growth for Q2 and 19% EBITDA growth, both slightly above Oppenheimer's forecast and in line with Street consensus. The company also increased its share repurchase authorization by $250 million to $750 million, with $500 million targeted for deployment over the next 12 months.

The firm sees Lyft as well-positioned to benefit from robotaxi developments due to its asset-light marketplace model and continued operational leverage, including a 34% reduction in headcount since 2022.

Risks to the outlook include competitive pressure from Uber (UBER) and the timing of autonomous vehicle adoption, though broader rideshare trends and urbanization are expected to support long-term demand.

Oppenheimer reiterated its outperform rating and raised its price target on Lyft shares to $17 from $15.

Shares of Lyft were up more than 22% in recent trading.

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