By Senad Karaahmetovic
Jefferies analysts raised the price target on Buy-rated Uber (NYSE:UBER) stock to $49 per share, signaling an upside potential of ~56% relative to Friday’s closing price.
The analysts also moved UBER stock to Top Pick, replacing Airbnb (NASDAQ:ABNB) in Jefferies’ research coverage of U.S. Internet stocks.
The deep-dive analysis charted a path to above-consensus EBITDA, fueled by faster Bookings growth in higher margin businesses (Mobility & Advertising), the analysts said in a note to clients.
“Combining our segment level estimates for Bookings and Margins arrives at ~$5.6B in '24 EBITDA and 7% upside to consensus. Our analysis also shows UBER has a long runway for margin expansion, with EBITDA growing ~3x faster than Bookings over the next 5 yrs (~45% vs. 15% '22-'27 CAGR).”
The strong EBITDA should “improve confidence in long-term economics and drive UBER's multiple higher,” ultimately paving the way for Uber shares to trade higher going forward.
Jefferies’ 18x '24 EV/EBITDA, on which the $49 per share price target is based, is still ~15% below the peer-based growth adjusted multiple, they added.
Uber shares are trading over 2% higher today.