Lyft, Inc. (LYFT) shares rose nearly 10% during Wednesday's session after Piper Sandler reiterated its Outperform rating and raised its price target to a Street high of $88.00 per share – a 64% premium over Tuesday's closing price.

Key Takeaways

  • Lyft shares moved sharply higher during Wednesday's session after Piper Sandler raised its price target to a Street high of $88.
  • Piper Sandler notes that a return to revenue growth should translate to rapidly improving EBITDA, while Wedbush sees a faster trajectory to profitability.
  • The stock moved into overbought territory as the relative strength index (RSI) hit 73.03, but the moving average convergence divergence (MACD) experienced a bullish crossover in early February. 

Piper Sandler analyst Alexander Potter recommends adding to positions in Lyft despite the post-earnings rally, saying that comparisons will turn exceptionally easy beginning in March and that a return to revenue growth should translate to rapidly improving EBITDA. Potter also moved the stock to top pick status following Lyft's fourth quarter results.

Wedbush also raised its price target on Lyft from $53 to $72 per share. Analyst Dan Ives sees a faster trajectory to profitability on the horizon as investors seek out reopening plays. While ride-sharing demand remains a challenge, the overall path toward profitability is leaps and bounds ahead of where it was a year ago, according to the analyst.

Chart showing the share price performance of Lyft, Inc. (LYFT)

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From a technical standpoint, Lyft stock broke out to fresh highs during Wednesday's session. The RSI moved into overbought territory with a reading of 73.03, but the MACD remains in bullish territory. These indicators suggest that the stock could see some consolidation over the coming sessions before resuming its move higher over the intermediate term.

Traders should watch for consolidation above prior highs and trendline support at around $54.50. If the stock breaks down from those levels, traders could see a move toward the 50-day moving average at $48.16 or reaction lows of $42.94. If the stock extends its move higher, traders could see a move toward fresh highs over the coming sessions.

Tip

Consolidation in technical analysis refers to an asset oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset's price moves above or below the trading pattern.

The Bottom Line

Lyft shares moved sharply higher after Piper Sandler reiterated its Outperform rating and raised its price target to $88 per share. In addition, Wedbush raised its price target to $72 per share, citing a faster trajectory to profitability. The stock appears overbought from an RSI standpoint, but the intermediate-term trend remains higher.

The author holds no position in the stock(s) mentioned except through passively managed index funds.