Lyft could turn a profit way quicker than everyone thought

• Lyft's second-quarter earnings blew past Wall Street estimates on Thursday.
• The results led many analysts to upgrade the stock and raise their price targets.
• With revenue-per-rider increasing, it looks like the company could turn a profit much sooner than anticipated.
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Lyft's growth is accelerating faster than predicted, the company said Wednesday.

In its second-quarter earnings report, the ride-hailing operator increased its full-year guidance on expected revenue by $200 million, sending the stock soaring in after-hours trading.

Wall Street analysts, meanwhile, injected the fresh expectations into their own models. Many now see the company turning a profit much sooner than previously thought.

"These were very strong results for Lyft with robust top-line growth on continued share gains, and a clearer path to profitability, " Doug Anmuth, an analyst for JPMorgan, told clients. The bank raised its price target from $86 to $90 for the stock, about 40% higher than where shares were set to open Thursday.

What's more, 2019 might not be the company's "peak loss" year anymore, as it previously said. That milestone appears to have been left in 2018, executives said on the earnings call Wednesday.

"We now anticipate that our 2019 adjusted EBITDA loss will be smaller than 2018 as we balance driving strong top line growth with demonstrating a clear path to profitability," chief financial officer Brian Roberts said.

Elsewhere on the Street, analysts including Daniel Ives of Wedbush upgraded the stock following the better-than-expected results.

"While not all questions are answered yet we think there is enough evidence in the field that is positioning Lyft to be in a stronger-than-expected domestic position to gain share and monetize this opportunity with an improved expense trajectory sooner than expected," he told clients in a note upgrading the stock to "outperform" from "neutral."

All eyes will be on Uber, which is scheduled to report its second-quarter results after the closing bell Thursday. The stock got a 4% boost overnight following Lyft's report, which was widely seen as good news for the ride-hailing industry as a whole, given that the two are no longer competing solely on a price-basis. Instead, the fight has now turned to overall product experience instead of coupons.

"Robust growth rates suggest continued market demand, while matching & other algorithm optimization suggest improved execution, as seen in rising Revenue per Rider," Joseph Spak, an analyst at RBC Capital Markets, said. "And perhaps most importantly, costs are coming down much quicker than investors seem to have anticipated."

More Lyft news:

• Lyft's scooters steering new customers to ride-hailing, but winter is coming
• Lyft continues to post losses despite revenue growth

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