On Thursday, Truist Securities maintained its Buy rating and $99.00 stock price target for Uber Technologies Inc . (NYSE:UBER), following news of the company's potential interest in acquiring Expedia Group Inc. (NASDAQ:EXPE). The analyst at Truist expressed skepticism regarding the viability of such a transaction for Uber, highlighting several concerns.
The analyst noted that an acquisition of Expedia would not align with Uber management's goal of using mergers and acquisitions as a growth driver. They pointed out that Expedia's growth rate is significantly lower than Uber's and that extracting synergies, especially from Expedia's business-to-business segment, could be challenging.
Additionally, the analyst underscored that pursuing Expedia could detract from Uber's focus on global mobility and delivery services, which are seen as key areas of growth. Such a move might also introduce additional risk at a time when the market is highly attentive to Uber's transition towards autonomous vehicles and its future valuation.
The Financial Times had reported earlier that Uber had shown interest in Expedia, with the exploration of a bid being at a very preliminary stage and no ongoing discussions. It was also mentioned that Uber's CEO, Dara Khosrowshahi, has ties to Expedia, having served as its CEO from 2005 to 2017 and currently sitting as a non-executive director on Expedia's board.
In other recent news, Uber Technologies Inc. has maintained positive ratings and price targets from various financial firms, despite the announcement of Tesla (NASDAQ:TSLA)'s Cyber Cab. BMO Capital reiterated an Outperform rating and a $92 price target, while Jefferies retained a Buy rating with a $100 price target. Both firms noted the lack of concrete plans from Tesla regarding the Cyber Cab, suggesting this absence of clarity is beneficial for Uber.
TD Cowen also displayed optimism towards Uber, maintaining a Buy rating. This outlook is based on Uber's strong demand, robust consumer base, and continuous enhancements to its platform. The potential impact of autonomous vehicle technology on Uber's business model has also been emphasized.
Uber has faced legal challenges with the U.S. Supreme Court rejecting the company's appeal against California lawsuits alleging misclassification of drivers as independent contractors. Despite these setbacks, Uber continues to partner with autonomous technology startups like Avride to expand its self-driving technology network.
Uber's higher free cash flows and a substantial $7 billion buyback program were recognized as supportive of a higher long-term valuation. The company's partnerships with Alphabet (NASDAQ:GOOGL)'s Waymo, Chinese firm WeRide, and Darden Restaurants (NYSE:DRI) further highlight Uber's commitment to growth and innovation. These recent developments reflect Uber's resilience and adaptability in the face of legal challenges and a rapidly evolving market landscape.
InvestingPro Insights
While Truist Securities maintains a Buy rating on Uber Technologies Inc. (NYSE:UBER) with a $99.00 price target, recent InvestingPro data provides additional context to the company's financial position. Uber's market capitalization stands at $172.07 billion, reflecting its significant presence in the ground transportation industry. The company's revenue for the last twelve months as of Q2 2024 reached $40.06 billion, with a notable revenue growth of 14.44% over the same period.
InvestingPro Tips highlight Uber's strong financial performance, with net income expected to grow this year and analysts predicting profitability. The company has also demonstrated impressive returns, with a one-year price total return of 84.54% as of the latest data. These factors may contribute to Uber's confidence in exploring potential acquisitions, despite the analyst's skepticism about the Expedia deal.
It's worth noting that Uber is trading at a high P/E ratio of 84.86, which could be a consideration for investors evaluating the company's valuation in light of potential M&A activities. For those seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Uber, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.