Needham & Company analysts revealed in a note Monday morning that the firm’s 20th Mobility Tracker highlights “increasingly aggressive” pricing by Lyft (NASDAQ:) throughout the first quarter.
The analysts, who have a Buy rating and $54 price target on Uber (NYSE:), added that in March, Lyft was cheaper than Uber 71% of the time, relative to 44% in December.
“This data, combined with the change in LYFT CEO, brings up the question of whether these moves will start a price war or lead to a more benign scenario of LYFT stabilizing and regaining some share loss,” they wrote.
Needham & Company believes it will be the latter and expects Uber to “focus on cross-platform and the benefits of a marketplace closer to equilibrium.”
“For LYFT, these pricing actions improve the risk/reward in shares with the aim of helping the terminal value,” the analysts added. “Near-term, we think a decline in high-margin pricing will pressure revenue and adj. EBITDA, thus we reduce our ’23E adj. EBITDA estimates nearly 30% to the low end of consensus.”