Shares of Lyft (LYFT) are on the rise on Wednesday after the ride-hailing company reported quarterly results and said it remains focused on achieving adjusted EBITDA profitability by the fourth quarter of next year. This comes a week after a big win for its business model at the polls, with California voters approving Proposition 22, a ballot measure allowing "gig economy" companies to continue treating drivers as independent contractors. Lyft also said that it is working on a new food-delivery and goods-delivery service.

RESULTS: On Tuesday after market close, Lyft reported third-quarter losses per share of ($1.46), or adjusted losses per share of (89c), with consensus at (91c). The company also reported third-quarter revenue of $499.7M, which was better than the expected $486.45M, and adjusted EBITDA loss for the quarter of $239.7M, an increase of $111.6M compared to adjusted EBITDA loss of $128.1M in the third quarter of 2019. The adjusted EBITDA loss for the third quarter of 2020 was approximately $25M better than the company's most recent outlook for adjusted EBITDA loss. Lyft reported $2.5B of unrestricted cash, cash equivalents, and short-term investments at September 30.

Brian Roberts, CFO of Lyft, said, "We remain focused on achieving adjusted EBITDA profitability by the fourth quarter of next year, even with a slower recovery." "As we look to the future, the win on Proposition 22 in California was a landmark achievement and a major victory for drivers, our industry, and the broader Lyft community," said John Zimmer, co-founder, and president of Lyft. " The company also reported third-quarter active riders of 12,513 and third-quarter revenue per active rider of $39.94. Additionally, Lyft sees fourth-quarter revenue up 11%-15% quarter-over-quarter.

FOOD-DELIVERY SERVICE: During the company's earnings call, John Zimmer said: "So as we mentioned a while back, we started doing a delivery pilot program at the start of the pandemic to connect drivers with more earning opportunities, and we did a lot of social impact work around delivering meals to those in need during the pandemic. And one, we're proud that we did that; and, two, it really helped us see how certain elements of our existing technology, we're perfect for being this kind of logistics arm for existing retailers and restaurants, organic traffic."

"We're hearing from these restaurants and retailers, especially during the pandemic, is they want a partner, not someone that's going to be taking 20% to 30%, but they want to just have the delivery capabilities, which, obviously, with the 1 million-plus drivers we have on the platform, we can provide. So not interested in a consumer platform. Interested in kind of more of the B2B organization-level approach, which we think is differentiated, and where we can say, 'Hey, we're not going to step between you and your customer, unlike other platforms'," the executive added.

Commenting on the expansion of Lyft's current food and goods delivery, Morgan Stanley analyst Brian Nowak said he sees three reasons to be "initially skeptical." First, Lyft will be competing with "sophisticated and capitalized" players in that space that include Uber (UBER), Amazon (AMZN), and DoorDash among others. Second, it is unclear how many markets Lyft has with substantial excess driver supply to drive items at scale, Nowak added. Lastly, the analyst pointed out that the unit economics of sub-scale food delivery have been shown to be challenging. Nowak raised the firm's price target on Lyft to $34 from $31, while keeping an Equal Weight rating on the shares following a third-quarter report that he sees showcasing a "still bumpy" rideshare recovery and a focus on stronger profitability.

In a research note of his own, Jefferies analyst Brent Thill pointed out that Lyft's delivery business "looks different than traditional food delivery" with a main focus on local retailers and acting as a B2B last-mile fulfillment and logistics provider. The fact that Lyft would not offer a marketplace to consumers, nor take the typical 20-30% commission, should appeal to local businesses, Thill said. The analyst also raised his price target on Lyft to $45 from $40, keeping a Buy rating on the shares.

BETTER DEMAND, LONG-TERM POTENTIAL: Following the quarterly results, UBS analyst Eric Sheridan raised the firm's price target on Lyft to $45 from $38, while keeping a Buy rating on the shares. The analyst noted that the company's third-quarter results highlighted its end demand coming off the lows earlier in the fall. Sheridan is also positive on Lyft's potential over the long-term, as shared transportation in multiple forms offers long runway for secular growth with "rational" competitive dynamics and a "broader positive" societal impact.

Keeping an Outperform rating on the stock, Wedbush analyst Daniel Ives raised the firm's price target on Lyft $48 from $37. The analyst believes that with Proposition 22 passing, the questions and the overhang around a shift in the business model, and a material increase in costs also go away "as this nightmare is in the rearview mirror."

RBC Capital, JPMorgan, BTIG, MKM Partners, Piper Sandler, Barclays, and Goldman Sachs also raised their price targets for Lyft.

PRICE ACTION: In morning trading, shares of Lyft have gained almost 6% to $38.09.