Street Calls of the Week
On Tuesday, BofA Securities adjusted its price target for Uber Inc. (NYSE: UBER) shares, bringing it down from $96.00 to $93.00, while reiterating a Buy rating on the company. The revision comes after observing Uber’s performance in the previous year, where it experienced a 2% decline, lagging behind the S&P 500 due to concerns surrounding autonomous vehicles (AV).
Despite the reduction in the price target, the firm’s outlook on Uber remains optimistic. The stock has seen a 14% increase year-to-date, which analysts believe indicates that the negative sentiment regarding AV may be exaggerated. According to InvestingPro data, Uber’s financial health score is rated as GREAT, with the company trading at a P/E ratio of 32.49. While Uber’s stock is currently trading at 15 times price to free cash flow (P/FCF), which is notably lower than the average of 29 times P/FCF seen in FANG stocks, a group of high-performing technology companies.
BofA Securities anticipates that Uber will form new AV partnerships in the upcoming year, expand into new markets with Waymo, and benefit from progress in AV technology by other Original Equipment Manufacturers (OEMs). The report specifically mentions Nvidia’s efforts in building an AV foundational model.
While there is a risk associated with the advancement of ’Walled Garden’ AV technologies by companies like Tesla (NASDAQ:TSLA) and Waymo, BofA Securities suggests that upcoming data points in 2025 could also indicate a more protracted timeline for the mass consumer adoption of AVs. This perspective seems to mitigate some of the concerns investors may have about the immediate impact of AV developments on Uber’s business model and market position.
In other recent news, Uber Technologies Inc . (NYSE:UBER) has been the subject of various key developments. Piper Sandler has lowered Uber’s stock price target to $82, reflecting a recalibration of gross bookings estimates for Uber’s Mobility division due to anticipated market share loss to autonomous vehicle technologies. Despite this, the firm maintains an Overweight rating on Uber’s shares. This comes alongside Cantor Fitzgerald’s decision to increase Uber’s stock target to $80, maintaining an Overweight rating. Needham also reiterated its Buy rating on Uber, with a price target of $90.
Uber has expanded its grocery delivery services through a strategic partnership with Wegmans Food Markets, Inc. The company has also announced a collaboration with Nvidia Corp (NASDAQ:NVDA) to expedite the development of autonomous driving technology. Furthermore, Delta Air Lines (NYSE:DAL) has ended its partnership with Lyft (NASDAQ:LYFT) in favor of Uber, enabling Delta’s SkyMiles loyalty program customers to earn miles through Uber rides and deliveries.
In a significant regulatory development, the New York City Taxi and Limousine Commission has withdrawn a proposed rule change requiring taxi and rideshare drivers to have coverage from a "solvent and responsible" insurance carrier, following Uber’s warning that this could potentially leave thousands of drivers uninsured. These are recent developments in Uber’s strategic efforts to expand markets, improve profitability, and boost investor returns.
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