Wedbush Praises Uber For 'Smart Strategic Move' In Buying Postmates

Ride-hailing company Uber Technologies Inc UBER will combine Postmates with its food delivery business, and Uber deserves credit for overseeing a "smart strategic move," according to Wedbush.

The Uber Analyst: Ygal Arounian maintains an Outperform rating on Uber's stock with an unchanged $47 price target.

The Uber Thesis: Postmates is the clear number four player in the food delivery space and the company was looking to file for an initial public company but was scooped up by Uber instead, Arounian said in a Monday note. (See his track record here.)

Now was the "right time" for Uber to acquire the "right company," and it did so at a "fair price" at around 1.0 TTM EV/GFS, the analyst said. 

The combined entity will have market share of roughly one-third of food delivery market, but this is still short of industry leader DoorDash, which has a 44% market share, he said. 

Uber also deserves credit for an "aggressive" acquisition, as it also comes at a time when Uber Eats faces increased headwinds on the profit front, Arounian said.

The company remains best positioned to consolidate Postmates with its Rides and Eats platform, the analyst said, adding that Uber can also expand its offerings with new services like grocery delivery.

Uber shouldn't face any antitrust issues, although the acquisition of Postmates could attract some "political headwinds" as local governments continue pressuring food delivery companies to cap their fees, according to Wedbush. 

UBER Price Action: Shares of Uber were trading higher by 5.93% at $32.50 at the time of publication Monday. 

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Uber's Ex-Chief Business Officer Isn't A Fan Of Reported Postmates Deal

Photo courtesy of Uber.