Uber stock maintains Buy rating, target price from Deutsche

Deutsche Bank has maintained its Buy rating and $95.00 price target for Uber Technologies Inc . (NYSE: NYSE:UBER), following the announcement of a significant autonomous vehicle (AV) partnership.

Uber is set to offer its customers the option to choose self-driving vehicles from GM-owned Cruise, starting in a city yet to be disclosed, where Uber does not have an existing AV partnership. This new venture is scheduled to commence in early FY25.

The collaboration is similar to Uber's existing relationship with Waymo, where a dedicated fleet is expected to be exclusively available for Uber's rideshare services. Although the agreement currently excludes delivery services and fleet management, there is potential for these elements to be incorporated in the future.

The initial arrangement does not involve Uber in the fleet management aspect, but the agreement could evolve to include such services.

As part of the partnership, while Uber will have dedicated access to Cruise's autonomous fleet, Cruise retains the possibility of pursuing its own first-party (1P) strategy. This could involve reconsidering its plans for personally-owned driverless vehicles in other cities, a concept akin to Tesla (NASDAQ:TSLA)'s Robotaxi approach.

The specific financial structure of the deal between Uber and Cruise has not been disclosed, but it is anticipated to either follow an agency model with a pure take rate or a merchant model where Uber would pay for vehicle access and manage monetization risk directly.

In other recent news, GM laid off of over 1,000 employees in its software and services units worldwide, a move aimed at streamlining operations and focusing on promising investments. Additionally, GM is facing a lawsuit from the state of Texas over concerns regarding data privacy, with allegations of selling private driver data without proper consent.

GM has also issued a recall of 21,469 electric SUVs in the United States due to concerns about the anti-lock brake system, planning to address the issue through a software update. In response to revised expectations for the automaker's product mix, RBC Capital has reduced its stock price target for GM, while maintaining an Outperform rating.

InvestingPro Insights

In light of the new partnership between Uber and GM-owned Cruise, it's noteworthy to consider GM's current financial metrics and market sentiment. According to InvestingPro, GM's management has been actively engaged in share buybacks, signaling confidence in the company's future performance. Additionally, analysts are optimistic about GM's earnings, with 11 analysts revising their earnings projections upwards for the upcoming period. This could be indicative of a positive outlook for the company's profitability and, by extension, the potential success of collaborations such as the one with Uber.

GM is also trading at a low P/E ratio of 5.27, with an even lower adjusted P/E ratio of 4.65 over the last twelve months as of Q2 2024. This suggests that the stock may be undervalued relative to its near-term earnings growth, which is further supported by a PEG ratio of just 0.21. Moreover, the company's revenue has grown by 4.93% over the last twelve months, reflecting a steady financial expansion. These data points, combined with GM's status as a prominent player in the Automobiles industry and the prediction by analysts that the company will be profitable this year, could provide additional confidence to investors interested in the implications of the Uber-Cruise deal.

For those seeking more in-depth analysis and additional InvestingPro Tips on GM, there are further insights available that could help investors make more informed decisions, especially in the context of GM's new ventures.

For further details and insights, more InvestingPro Tips are available at: https://www.investing.com/pro/GM

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