One of the most highly anticipated IPOs is coming this week: Lyft.
One analyst is ready for the ride. D.A. Davidson's Tom White is bullish with a buy rating and $75 price target on the ride-hailing company.
With Lyft reportedly looking to price even higher than its $62 to $68 a share range, White said he could revisit his target.
"It would depend on whether any new information came out perhaps over the course of the roadshow that would cause us to revisit our financial forecasts or potentially if we get a sense that investors — either because of the growth prospects of the company or maybe just supply-demand dynamic for shares — potentially reassess the multiple," White said Tuesday on CNBC's "Trading Nation."
If Lyft were to trade at White's $75 target, it would value the company at $21.3 billion. A valuation that high would give it a bigger market cap than more established names including United Continental, Xerox and Kellogg.
However, it is still dwarfed by its larger competitor, Uber, which has a valuation of roughly $120 billion ahead of its planned initial public offering later this year.
While White does not expect Lyft to eclipse Uber in terms of market share, he said the space is large enough for two big players to grow.
"We looked more at the taxi and limousine industry that's being disrupted," he said. "That's the kind of analysis we've done on sort of a market-by-market basis to try and come up with what we think is kind of a near-term revenue opportunity of about $105 billion in the U.S," he said.
Lyft's profitability remains a major risk for the company, though, said White. According to its S-1 filing, it lost $911 million in 2018, 33 percent wider than two years earlier. White does not expect profitability by 2022 (as far as his financial forecasts extend); instead, he prioritizes progress toward profit.
"There are a few different levers they can potentially use to bring down the cost over time," he said, listing realized efficiencies and increased shared rides as two factors. "Long term, the biggest potential lever would be having autonomously operated taxi fleets driving around and obviously that would help bring the cost down by not having to pay drivers."
Autonomous driving also presents its own challenges, though.
"There are legitimate questions about Lyft's positioning in autonomous specifically. They've started a little bit late in terms of investing and kind of developing their own proprietary autonomous and they're going up against some very deep-pocketed competitors on that front, too," he said.
Tesla, Alphabet's Waymo and semiconductor company Nvidia have all made headway in self-driving technology.
Lyft is expected to price its IPO on Thursday evening and make its market debut Friday morning.
