On Friday, Wolfe Research displayed a positive stance on Uber Technologies Inc . (NYSE: NYSE:UBER), increasing the price target to $92 from $90, while maintaining an Outperform rating on the company's shares. The adjustment reflects the analyst's perspective on Uber's current market position and future prospects.
As a prominent player in the Ground Transportation industry with a market capitalization of $133 billion, Uber has demonstrated strong financial health according to InvestingPro analysis, which shows the company is profitable over the last twelve months.
Shweta Khajuria at Wolfe Research supports her outlook with a three-part thesis. First, a Sum of the Parts (SOTP) valuation indicates that Uber's Mobility business is undervalued compared to Lyft (NASDAQ:LYFT), despite Uber having a 50% market share in international rides (excluding China). Additionally, the Delivery business is seen as trading at a discount to competitor DoorDash (NASDAQ:DASH).
Second, the analyst anticipates a modest rise in Uber's EBITDA, which currently stands at $3.45 billion, driven by the company's continued efforts toward operational efficiency and product expansion. With annual revenue reaching $41.95 billion, this aspect of the business is expected to contribute to the company's financial health. For deeper insights into Uber's financial metrics and growth potential, InvestingPro subscribers have access to over 30 additional financial indicators and expert analysis.
Third, the research points out that Waymo is currently the only autonomous vehicle (AV) technology with scaled potential in the near term. While Tesla (NASDAQ:TSLA) has set ambitious targets for the coming year, Wolfe Research's checks suggest that Tesla faces a significant technological debt compared to Waymo, likely resulting in underperformance against the AV objectives it set in October.
The analyst acknowledges the long-term implications of the autonomous vehicle narrative on terminal value but suggests that the near-term sentiment has caused a misalignment between Uber's share price and the pattern of estimate revisions. Wolfe Research believes that Uber's consistent performance and gradual increase in estimates, combined with more detailed disclosures about its autonomous vehicle technology, will pave the way for the stock to outperform.
Uber's focus on operational efficiency gains and product expansion, alongside the competitive landscape in the autonomous vehicle space, are central to Wolfe Research's optimistic price target. The broader analyst community shares this optimism, with price targets ranging from $75 to $120, according to InvestingPro data. The firm expects these factors to contribute to Uber's market performance and support the stock's upward trajectory, with analysts predicting continued profitability this year.
In other recent news, Uber Technologies Inc. has seen significant developments, with analysts maintaining positive outlooks despite industry challenges. Mizuho (NYSE:MFG) Securities continues to hold an Outperform rating for Uber, predicting a high-teens rate of growth for Fiscal Year 2025 Gross Bookings. They also expect Uber's EBITDA to align with company targets, leading to an increase in Free Cash Flow per share to $5.
Simultaneously, Bernstein and Jefferies have also maintained their Outperform and Buy ratings for Uber respectively, with Bernstein projecting a 15% Compound Annual Growth Rate in Gross Bookings and a 32% CAGR in Earnings Per Share from 2024 to 2026.
However, JMP Securities downgraded Uber's stock from Market Outperform to Market Perform, citing the industry's shift towards autonomous vehicles. In other developments, Taiwan's Fair Trade Commission halted Uber's planned $950 million acquisition of Foodpanda's local delivery business due to anti-competition concerns.
Despite these challenges, Uber remains committed to its growth investments, with analysts highlighting the company's strong financial health, solid revenue growth, and potential for future expansion.
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