(Bloomberg) -- The intense competition Lyft Inc. faces from rival Uber Technologies Inc. is threatening to pressure its margins, according to an analyst who has become the lone bear on the stock.

Arete Research Services LLP downgraded Lyft to sell from neutral, with analyst Oliver Lester noting that competition from Uber in areas such as pricing were forcing the ride-hailing firm to “sacrifice” margins in order to maintain growth. As a result, Lester sees limited scope for Lyft to improve margins in fiscal year 2025.

The intensified competition has “exposed how vulnerable Lyft is to Uber copying its innovations, reducing prices and stealing away its key partners,” Lester wrote in a note published on Tuesday. Lyft “lacks diversification outside of ride-hailing, offers a largely undifferentiated service, and lacks new options to boost long-term growth or improve customer retention,” he added.

Among analysts tracked by Bloomberg, Lyft now has 12 buy-equivalent recommendations, 33 holds and one sell. Lester’s new price target of $10 is the lowest on the Street, and implies 26% downside from Friday’s close. Lyft shares rose 4.3% in New York on Tuesday.

Lyft is Uber’s biggest rival in the US, and has managed to appeal to customers through features such as price lock, which lets riders pay the same price for a trip they take from the same pickup and drop-off destinations at a similar time of the day. While Uber had initially been slow to respond to Lyft’s attempts at differentiating itself, Lester said the company was now starting to launch comparable services to almost all new offerings.

Both companies reported disappointing earnings in the last two weeks, having issued first-quarter bookings forecasts that failed to meet investor expectations. Still, Lyft’s shares are underperforming those of its rival, up 8.6% year-to-date in comparison to Uber’s 35% gain.

“With Uber now quickly erasing one of the few clear sources of differentiation between the companies, whilst also offering drivers new forms of work (e.g. grocery, delivery, Uber for Business), we struggle to see how Lyft will maintain share, given it would almost certainly lose a price war,” Lester said.

Lester also said Uber is better positioned to deal with threats from autonomous vehicle companies such as Waymo LLC, noting it can “forestall” the impact through copying innovations and “stealing away” partners from Lyft. Meanwhile, Lester sees the risks to Lyft’s business model from autonomous vehicles persisting in fiscal year 2025 as Waymo and others make progress on high-profile rollouts.