On Tuesday, BTIG has reaffirmed its Buy rating on Uber Technologies Inc . (NYSE: NYSE:UBER) with a steady price target of $90.00. The firm's recent analysis focused on Uber's US mobility segment, examining the components that influence revenue growth and insurance expenses, as well as the company's prospects for 2025. The study by BTIG highlights that fare increases have been a significant contributor to Uber's growth, enabling the company to offset rising insurance costs.
The firm's data indicates that insurance costs represent a low double-digit percentage of Uber's bookings and predicts high single-digit growth per ride. Furthermore, the total insurance costs are expected to see high-teen growth rates.
Despite the fare increment ranging from 0 to 6% compared to the 11% growth observed in the firm's data for the year-to-date in 2024, BTIG projects an increase in Uber's US mobility EBITDA for 2025. The estimate ranges between $3.6 billion to $4.2 billion, which represents an increase of up to 17% from the current year, albeit lower than the consensus estimate of approximately $4.4 billion.
BTIG's commentary notes that while the general market may not fully account for the interplay between pricing and insurance expenses, the potential risks seem to be already factored into Uber's stock price, especially considering the decline following the third-quarter earnings report.
The firm's analysis suggests that Uber has been successful in managing the growth of its insurance costs through fare adjustments, which has contributed to the company's overall financial performance.
Uber's stock performance and outlook remain a point of interest for investors, particularly in light of the company's ability to navigate operational costs and maintain profitability.
BTIG's reiteration of its Buy rating and price target reflects confidence in Uber's strategic management of its US mobility business and its potential for growth in the coming years.
InvestingPro Insights
Complementing BTIG's analysis, recent data from InvestingPro sheds additional light on Uber's financial position and market performance. The company's market capitalization stands at an impressive $154.6 billion, reflecting its dominant position in the ground transportation industry. Uber's revenue growth remains strong, with a 20.4% increase in the most recent quarter, aligning with BTIG's observations on the company's ability to drive growth through strategic pricing.
InvestingPro Tips highlight that Uber is expected to be profitable this year, with net income projected to grow. This supports BTIG's positive outlook on the company's EBITDA prospects for 2025. Additionally, Uber's strong return over the last five years, as noted by InvestingPro, underscores the company's long-term value creation for shareholders.
It's worth noting that Uber is trading at a high P/E ratio of 75.32 (adjusted for the last twelve months), which may reflect market expectations for continued growth. However, the company's PEG ratio of 0.11 suggests it may be undervalued relative to its growth prospects, potentially supporting BTIG's Buy rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips on Uber, providing a deeper understanding of the company's financial health and market position.
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