Uber stock price target raised to $115 by BofA on driver tax benefits

Investing.com - BofA Securities raised its price target on Uber Inc. (NYSE:UBER) to $115.00 from $97.00 on Tuesday, while maintaining a Buy rating on the stock. The ride-hailing giant, currently trading near its 52-week high of $97.12, has delivered an impressive 60.28% return year-to-date. According to InvestingPro data, analyst targets for Uber now range from $76 to $120, reflecting strong Wall Street confidence in the company’s trajectory.

The price target increase reflects potential benefits from the "No Tax on Tips" provision in the Big Beautiful Bill, which extends to 1099 workers including gig-economy drivers for Uber and Lyft (NASDAQ:LYFT).

BofA estimates Uber drivers will earn approximately $42 billion in 2025, with tips accounting for about $5.7 billion, or 7% of the company’s expected $88 billion in gross bookings.

These tax savings could amount to roughly $1 billion for drivers, assuming an average tax rate of 18%, effectively providing a 2.5% pay increase for Uber’s driver workforce.

The research firm suggests this tax benefit could provide a "modest tailwind to supply" which may indirectly support Uber’s take rates, contributing to the more bullish outlook reflected in the higher price target.

In other recent news, Moove is nearing a $1.2 billion debt raise aimed at expanding its autonomous vehicle fleet in collaboration with Alphabet (NASDAQ:GOOGL)’s Waymo, marking a significant milestone for the African startup. This funding round, which is oversubscribed, will also help Moove grow its presence in the U.S. market. Meanwhile, Uber Eats has expanded its grocery delivery service by partnering with six regional supermarket chains, including Big Y and King Kullen, as it continues to invest in its grocery delivery category. Additionally, Uber is reportedly in talks to potentially acquire the U.S. operations of Pony.ai, a Chinese autonomous vehicle company, as part of a creative deal that includes its founder, Travis Kalanick.

Bernstein has maintained its Outperform rating on Uber, highlighting the potential equity investment in Pony.ai’s U.S. operations as a strategic move. Furthermore, BMO Capital reports that Waymo remains a leader in the autonomous vehicle industry, though the path to profitability is still unclear. Citizens JMP has reiterated its Market Perform rating on Uber, noting a growth slowdown in San Francisco but acknowledging Waymo’s positive unit-level gross profit margins. These developments reflect ongoing strategic maneuvers in the autonomous vehicle and delivery sectors.

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