Ride-hailing service providers, Uber Technologies (UBER) and Lyft (LYFT) have won the California Supreme Court ruling regarding the gig workers’ designation for their cab drivers. The Court upheld Proposition 22, which allows the companies to continue classifying the drivers as individual contractors rather than employees. The ruling puts to rest the years-long legal battle, which was initiated by a group of drivers and a labor union, who wanted more benefits in terms of paid sick leaves and health insurance coverage.
The ride-hailing companies, along with players such as DoorDash (DASH) and Instacart, had proposed that the ruling be taken based on a ballot measure. Proposition 22 includes certain favorable terms such as minimum wages, occupational accident insurance, and health insurance for drivers who work for more than 15 hours per week. The ruling ensures that both Uber and Lyft can continue business as usual in California without having to worry about enhanced expenses and potential fines.
Last month, both companies won another similar favorable ruling in Massachusetts. They have agreed to raise the minimum per hour wages while also granting paid sick leave, accident insurance, and healthcare allowances.
Earnings Approach with High Expectations
Both Uber and Lyft are expected to release their second quarter results soon. Uber is scheduled to report its results on August 6 while Lyft will announce them on August 7.
The Street expects Uber to post diluted earnings of $0.31 per share on revenues of $10.55 billion. This shows good improvement over Q2 FY23, when Uber posted diluted earnings per share (EPS) of $0.18 on revenues of $9.23 billion.
Similarly, Lyft is expected to post adjusted EPS of $0.16 on revenues of $1.39 billion. In the prior-year quarter, the company reported an adjusted EPS of $0.16 per share on revenues of $1.02 billion.
Is Uber a Buy or Sell Right Now?
On TipRanks, UBER stock commands a Strong Buy consensus rating based on 31 Buys versus one Hold rating. The average Uber Technologies price target of $87.93 implies 33.8% upside potential from current levels, while its shares have gained 6.8% year-to-date.
Is Lyft a Buy or Sell?
Unfortunately, analysts are sidelined on Lyft stock. On TipRanks, LYFT has a Hold consensus rating based on seven Buys and 23 Hold ratings. The average Lyft price target of $18.82 implies 54.1% upside potential from current levels, while shares have lost 18.6% year-to-date.
