Photo courtesy of Lyft

LYFT Inc LYFT, which is competing against bigger rival Uber Technologies Inc UBER, could be a better bet for investors at this point of time, according to an analyst at Argus.

The Lyft Analyst

Jim Kelleher initiated coverage of Lyft with a Buy rating and $39 price target.

The Lyft Thesis

Lyft shares are down 36% over the past quarter as the COVID-19 pandemic, significantly reduced the demand for transportation, Kelleher said in a Tuesday initiation note. (See his track record here.)

The sell-off appears overdone and the shares are attractive at current levels, the analyst said.

The North American ride-sharing industry is large enough to support both Lyft and Uber, he said.

Lyft can thrive despite its size, as the ride-sharing industry is not a "winner-take-all" industry, Kelleher said. 

Lyft has invested sufficient capital to build its technology infrastructure, the analyst said. 

"As long as Lyft is able to keep pickup times competitive with those of its rival, it should remain a leader in this fast-growing industry."

LYFT Price Action

Lyft shares were down 0.65% at $29.90 at the time of publication Tuesday.