On Friday, Piper Sandler increased its price target for Uber Technologies Inc . (NYSE:NYSE:UBER) shares to $92 from the previous target of $78, while reiterating an Overweight rating on the stock.
"We see UBER as having the greatest right to win within the Gig Economy given FCF has inflected positive and management is now placing a greater focus on capital returns," said analysts at the firm.
Uber's New Mobility products, such as Share, Reserve, and Taxi, are cited as key growth drivers, with bookings for these services reaching an $11 billion annual run rate and a year-over-year growth of 80%. These offerings, along with the Grocery segment, are expected to contribute to potential outperformance against the Street's projection of $164 billion in bookings for 2024.
The company's scale, which surpasses that of its peers combined, is underlined as a competitive advantage. Additionally, the firm observes that Uber's EBITDA margins have shown improvement in 2023, with EBITDA dollars increasing approximately 2.5 times. The expectation of further margin gains is also mentioned as a positive sign for the company's financial health.
The firm suggests that Uber's valuation warrants a premium compared to its competitors, advocating for a low-20s multiple on the company's estimated EBITDA for 2025, as opposed to Lyft Inc. (NASDAQ:LYFT) and DoorDash Inc. (NYSE:DASH), which trade at mid-teen multiples. The analyst's outlook for Uber is optimistic, reflecting confidence in the company's strategic direction and market position.
InvestingPro Insights
Uber Technologies Inc. (NYSE:UBER) continues to be a focal point for investors, with Piper Sandler's recent price target increase to $92. This bullish outlook is supported by several key metrics and insights from InvestingPro. As of the last twelve months ending Q4 2023, Uber has exhibited a substantial revenue growth of 16.95%, reaching $37.28 billion USD, which underscores the company's expanding market presence. The EBITDA growth during the same period was a remarkable 318.42%, reflecting strong operational efficiency and profitability potential.
InvestingPro Tips also highlight that Uber is expected to see net income growth this year, with six analysts revising their earnings upwards for the upcoming period. This aligns with the company's positive trajectory and may signal further upside for investors. Moreover, Uber's performance over the last year has been strong, with a price total return of 142.88%, showcasing investor confidence and market momentum.
While Uber's P/E ratio stands at a high 83.64, the company trades at a PEG ratio of 0.72, indicating that its price may be reasonable relative to its expected earnings growth. This could be a compelling factor for investors considering the value of growth prospects in their investment decisions. For those looking to delve deeper into Uber's financials and future outlook, InvestingPro offers additional insights and tips. There are 15 more InvestingPro Tips available, providing a comprehensive analysis of Uber's financial health and market potential. To access these tips, visit InvestingPro's Uber page and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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