Lyft, Uber Stocks Gain Ground on New Buy Ratings

Evercore ISI is targeting major upside for the two stocks

Jun 13, 2019 at 3:07 PM
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The shares of LYFT Inc (NASDAQ:LYFT) and Uber Technologies Inc (NYSE:UBER) are both trading higher today, after Evercore ISI initiated coverage on the ride-sharing stocks with "outperform" ratings and lofty price targets ($74 for Lyft; $60 for Uber). The brokerage firm cited "powerful near term catalysts," and an "improving pricing environment."

The brokerage firm also called LYFT a "pure play" that's "disrupting" the auto sector, sending the stock up 2.8% to trade at $60.05 -- on track for its third straight win. Most analysts are already bullish on Lyft, with 18 of 26 maintaining a "buy" or better rating, and the average 12-month price target of $71.41 a nearly 19% premium to current trading levels.

Options traders are upbeat, too, with 1.60 calls bought to open for each put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) in the last two weeks. However, with 11.4% of LYFT stock's float controlled by shorts, it's possible some of these calls are being used as an options hedge.

For Uber, Evercore ISI specifically highlighted the company's "diverse and powerful" digital platform. In reaction, UBER shares have gained 2.1% today to trade at $43.06, set to snap its five-day losing streak. This just echoes the upbeat tone analysts have struck on UBER in the wake of its blackout period, with 20 of 23 calling the equity a "buy" or better, and not a single "sell" on the books.

In the options pits, speculators have shown a preference for calls over puts, per UBER's top-heavy 10-day call/put volume ratio of 2.52 at the ISE, CBOE, and PHLX. Calls are outpacing puts in today's trading, too, albeit amid relatively light volume. At last check, around 23,000 calls and 9,300 puts were on the tape.

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