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BofA cuts Uber price target to $93, maintains Buy rating

Published 11/01/2024, 04:26 AM
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On Thursday, BofA Securities made an adjustment to Uber Inc.'s (NYSE:UBER) financial outlook, reducing the price target to $93 from the previous $96. Despite this change, the firm continues to recommend a Buy rating for the ride-hailing giant's stock.

The adjustment came after Uber reported its latest financial results, which showed bookings, revenue, and EBITDA figures slightly mixed compared to Wall Street expectations. The company's bookings were reported at $41.0 billion, revenue at $11.19 billion, and EBITDA at $1.69 billion. These numbers were close to the Street's projections of $41.2 billion in bookings, $10.99 billion in revenue, and $1.65 billion in EBITDA.

A significant milestone was reached as Uber achieved $1 billion in quarterly GAAP Operating Income. However, the Mobility bookings did not meet analysts' expectations, coming in 2% below the Street's forecast. While Mobility bookings increased by 24% excluding foreign exchange effects, this was a slight decrease from the 26% growth seen in the second quarter.

The company's Delivery service performed as expected, aligning with predictions. In its commentary, Uber's management mentioned experiencing some challenges in the U.S. Specifically, certain cities were affected by insurance inflation, which led to price increases and tested consumer demand elasticity.

Notably, the subscription service Uber One has seen substantial growth. The number of subscribers has surged to 25 million globally, a significant increase from 15 million the previous year. These members now contribute to 35% of Uber's bookings, indicating the company's successful efforts to strengthen network effects and customer loyalty.

In other recent news, Uber Technologies Inc . (NYSE:UBER) delivered a record-breaking third quarter, demonstrating robust growth and profitability. Earnings exceeded expectations, with gross bookings increasing by 20% year-over-year and the company achieving a GAAP operating profit surpassing $1 billion for the first time. Evercore ISI raised its price target for Uber to $120, maintaining an Outperform rating, following this strong performance.

The company's Uber One membership saw a 70% increase year-over-year, reaching over 25 million, while the advertising segment experienced nearly 80% growth. Uber also reported a strategic expansion into less populated U.S. markets and the extension of its partnership with Waymo to Austin and Atlanta. However, rising insurance costs in the U.S. mobility sector, which increased by 16% year-over-year, posed challenges.

Analysts from Evercore ISI reaffirmed their confidence in Uber, considering it one of their top large-cap long positions. They recommend buying Uber shares during the current correction. These are some of the recent developments for Uber, indicating sustained growth and solid fundamentals.

InvestingPro Insights

Uber's recent financial performance and BofA Securities' adjusted outlook align with several key metrics and insights from InvestingPro. Despite the slight reduction in price target, Uber's market position remains strong, with a substantial market cap of $150.83 billion.

InvestingPro data shows that Uber's revenue growth remains robust, with a 15.93% increase in the most recent quarter. This growth trajectory supports the company's ability to navigate challenges such as insurance inflation in certain U.S. cities, as mentioned in the article.

Two relevant InvestingPro Tips highlight Uber's financial health and market position:

1. Uber is expected to see net income growth this year, which aligns with the company achieving $1 billion in quarterly GAAP Operating Income.

2. Uber is a prominent player in the Ground Transportation industry, reinforcing its market leadership despite competitive pressures.

These insights, along with Uber's strong year-to-date price total return of 29.01%, suggest that the company's growth strategy, including the expansion of its Uber One subscription service, is yielding positive results.

For investors seeking a deeper understanding of Uber's financial prospects, InvestingPro offers 13 additional tips, providing a comprehensive view of the company's potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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