By Mackenzie Tatananni

Ramping competition in the autonomous vehicle market could be a blessing in disguise for Lyft, TD Cowen says.

Analyst John Blackledge upgraded Lyft stock to Buy from Hold in a research note Tuesday. He expects its price to rise as multiple levers fuel the ride-hailing company's growth.

Blackledge also boosted his price target to $21 from $16. Shares were rising 4.7% to $15.65 on the heels of the upgrade, with the new target price suggesting potential 34% upside.

In conjunction with the upgrade, TD dubbed Lyft its "Best Smidcap Idea for 2025," referring to small and medium-size companies, as Lyft's market cap hovers at around $6.3 billion.

The upgrade came just two days after Tesla's much-awaited robo-taxi launch, which saw roughly a dozen vehicles hitting the streets of Austin, Texas. Sunday's rollout was a milestone toward CEO Elon Musk's aim to have "millions" of AVs on the road by 2026.

Uber Technologies, likewise, made headway into the AV space. On Tuesday, Uber and Alphabet-owned Waymo launched its self-driving taxi service in Atlanta, sending shares of the ride-hailing app up 4.2%.

Competition is intensifying, but this isn't necessarily a bad thing. As Blackledge sees it, autonomous vehicles should expand ride-sharing's market demand over the long term. Lyft itself has projected that the cost to book an AV will come down over the next five to 10 years, driven by competitive pricing and increased supply, he noted.

Lyft is on pace to roll out AVs this coming summer in Atlanta, and has announced plans to bring AVs to Dallas next year alongside Marubeni and Mobileye.

Ride-hailing rival Uber has captured the lion's share of the market, at 70% to Lyft's 30%, TD Cowen estimates. The firm doesn't anticipate "any material change in market share over the next several years." However, "we do not think Lyft needs to take share from Uber for the stock to work," Blackledge wrote.

He says Lyft is blazing a path of its own through partnerships with AV providers, coupled with its push to expand not just nationwide, but further into Canada and Europe. The company completed its acquisition of Freenow, a German taxi-hailing app, earlier this month.

Conversations with management have affirmed that Lyft is tracking toward its three-year growth targets, Blackledge added. These include around $25 billion in gross bookings in 2027 and GAAP profitability in the "earlier part" of the period between 2025 and 2027.

Time for investors to buckle up.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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June 24, 2025 10:13 ET (14:13 GMT)

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