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Investing.com -- UBS remained bullish on Uber (NYSE:UBER) in its latest note, maintaining a Buy rating with a slightly reduced price target of $106 from $107, citing confidence in the company’s ability to hit its 2026 targets despite ongoing concerns over robotaxis.
The firm highlights that Uber is well-positioned to "compound Adj. EBITDA at ~40% in a 3-year period," supported by stronger-than-expected growth in gross bookings. I
The bank explains that in the fourth quarter of 2024, Mobility bookings grew 24% year-over-year, while Delivery saw an 18% increase.
Uber has guided for "20%+ for 1H24" in Mobility and similar levels for Delivery, reinforcing its growth trajectory, notes UBS.
The bank’s analysts also see Uber’s ability to expand margins as a key strength. "Ongoing efficiencies allowing mgmt. to underwrite margin expansion in 2025 in both mobility and delivery" are expected to drive improved profitability.
While robotaxis remain a potential long-term disruption, UBS believes the risk is overstated. "Uber expects robotaxis to be able to address 10%-15% of rideshare marketplace demand in the next 5 years, substantially lower than the ~30% level we have heard from investors," said UBS, believing it suggests a more manageable impact.
Additionally, they state that Uber’s growing membership base through Uber One, which increased to 30 million in Q4 2024 from 25 million in Q3, provides further stability. The firm also notes that "limited anticipation of change in US mobility or global delivery competitive environments" should help sustain Uber’s mid-term growth.
Despite slightly weaker-than-expected Q1 2025 gross bookings guidance of $42.0 billion to $43.5 billion, UBS sees Uber’s long-term fundamentals intact. The company reaffirmed its "$7B buyback target," reinforcing confidence in its financial outlook.
UBS estimates an upside scenario of $114 per share, with a "2-YR Gross Bookings CAGR growth of 16%" and an Adjusted EBITDA margin of 5.2%. The firm remains optimistic, viewing Uber as a "multi-platform, steady mid-term compounder" with strong growth prospects.