Lyft (LYFT) is competing relatively closer to main rival Uber (UBER) than investors appreciate, RBC Capital Markets said in a note Tuesday.

Lyft is "unlocking new parts of the [total addressable market] with an expanding number of ride types, which enables it to compete on a more even playing field with Uber," RBC said in the note after meeting Lyft's Vice-President of Investor Relations Aurelien Nolf.

The process of unlocking parts of the TAM is driving bookings and rides down, but it's also improving Lyft's affordability, RBC said, adding that more rides and more gross profit mean that the company is on a "clear path to building a bigger business."

Also, the "drivers of recent ride efficiency outperformance appear sustainable with more room to go," the note said.

RBC said that "better-than-feared results have shares up 32% since the print but with the stock still trading at 8.6x EV/'26 EBITDA" the thesis that supports Lyft's outperform rating remains unchanged.

The investment firm has a $21 price target on Lyft.

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