KeyBanc has increased its price target on shares of Uber Technologies Inc . (NYSE: NYSE:UBER) to $90 from the previous $80, while keeping an Overweight rating on the stock. The adjustment reflects a positive outlook on the company's operational efficiency and potential foreign exchange gains.
The firm's analyst cited unchanged expectations for Uber's Gross Bookings and revenue from 2024 to 2026 but noted the potential for slight gains due to foreign exchange (FX) movements. The analyst believes that even without considering possible top-line growth, Uber's operational efficiencies are likely to drive EBITDA growth more rapidly than previously projected.
According to the updated analysis, KeyBanc has raised its EBITDA projections for Uber in the coming years. The firm now expects Uber to achieve EBITDA of $6.5 billion in 2024, $8.6 billion in 2025, and $11.3 billion in 2026, marking an increase of 1%, 1%, and 2% for each year respectively.
The new price target of $90 is based on a valuation multiple of 16.7 times the expected 2026 enterprise value to EBITDA (EV/EBITDA). This revised target suggests that the analyst is factoring in a shift to valuation multiples for the year 2026, indicating a long-term confidence in the ridesharing company's financial performance.
Uber's stock price target update by KeyBanc reflects an optimistic view of the company's ability to enhance profitability through improved operational efficiency, alongside the potential benefits from currency exchange fluctuations.
In other recent news, Darden Restaurants (NYSE:DRI) has announced a delivery partnership with Uber Technologies. The pilot program is set to begin at select Olive Garden locations in late 2024, with plans to extend the service to all 900 national outlets by May 2025.
This development follows Darden's reported shortfall in first-quarter sales and profit, largely attributed to a decrease in customer traffic amidst inflation. The company's quarterly net sales reached $2.76 billion, slightly below the anticipated $2.80 billion.
On another note, Uber Technologies has maintained a Buy rating from both BTIG and Truist Securities. BTIG highlighted consistent growth in the rideshare and delivery sectors, while Truist Securities pointed out the robust demand in both Mobility and Delivery divisions.
Uber has also been active in expanding its autonomous vehicle initiatives. The company, in collaboration with Waymo LLC, plans to bring autonomous vehicle ride-hailing services to Austin and Atlanta starting in early 2025.
InvestingPro Insights
As Uber Technologies Inc. (NYSE: UBER) garners a heightened price target from KeyBanc and continues to evolve its business strategies, insights from InvestingPro shed additional light on the company's financial health and market position. With a current market capitalization of $162.13 billion, Uber's valuation reflects its status as a major player in the transportation sector. The company's P/E ratio, while high at 79.23, may be justified by the expected growth in net income this year, as indicated by an InvestingPro Tip.
InvestingPro Data also reveals a robust revenue growth of 14.44% over the last twelve months as of Q1 2023, underscoring the company's expanding business despite broader economic challenges. The company's gross profit margin stands at a healthy 32.37%, pointing towards operational efficiencies that could bolster EBITDA growth as projected by KeyBanc's analysis.
An InvestingPro Tip highlights that 3 analysts have revised their earnings upwards for the upcoming period, aligning with KeyBanc's positive outlook and suggesting that market sentiment is tilting favorably for Uber. Moreover, the company's price target of $90 aligns closely with the fair value of $90 as per analyst targets, providing a level of validation for KeyBanc's revised target.
For investors seeking a deeper dive into Uber's financial metrics and strategic positioning, there are additional InvestingPro Tips available on the platform, offering comprehensive analysis and forecasts that can guide investment decisions.
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