Uber Analysts Bullish After Q1 Report: 'Mobility's Recovery Continues To Progress'

Uber Technologies Inc UBER shares traded lower by 6.8% on Thursday morning after the company reported first-quarter revenue that fell short of Wall Street expectations.

For the first quarter, Uber reported an adjusted EPS loss of 6 cents, beating consensus analyst estimates of a 54-cent loss. Uber also reported $2.9 billion in revenue, missing consensus estimates of $3.29 billion. Revenue was down 11% from a year ago.

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Uber reported $6.77 billion in Mobility gross bookings, down 38% from a year ago. It generated $12.46 billion in Delivery gross bookings, up 166% from last year.

Uber’s $108 million net loss in the quarter was a significant improvement from its $968 million net loss a year ago. However, the company’s bottom line benefitted from a $1.6 billion gain from the sale of Uber’s self-driving unit, and Uber’s actual operating loss on the quarter was still more than $1.5 billion.

Regulatory Overhangs: Wedbush analyst Daniel Ives said Uber is showing signs of significant recovery from the COVID-19 pandemic, but it is also facing regulatory overhangs.

“The elephant in the room is the regulatory environment which has thrown uncertainty into the employee vs. contractor debate with the latest moves coming out of the Biden Administration, a troubling scenario/overhang for the bulls,” Ives wrote.

Morgan Stanley analyst Brian Nowak said labor regulations are “likely manageable” for Uber.

“While investors are highly focused on regulation, it is also important to review 1Q results/forward trends and why we remain bullish fundamentally about this recovery asset and how we think about its scaling, cross-product [and] cash-flow generative potential into ‘22,” Nowak wrote.

D.A. Davidson analyst Tom White said Uber investors will likely continue to focus on regulation and driver supply.

“Mobility's recovery continues to progress, and mgmt had some encouraging early data on Delivery segment resiliency in cities where restaurants have already re-opened,” White wrote.

Delivery Business Booming: Bank of America analyst Justin Post said Uber’s Mobility business is rebounding, but its Delivery business is still growing.

“While there could be some concerns on Uber’s 2Q 20% mobility take outlook vs. Lyft’s higher 2Q contribution margin outlook, Uber is offering incentives to improve the consumer experience and indicated driver supply could be more balanced by 3Q,” Post wrote.

Raymond James analyst Aaron Kessler said Delivery has strong momentum, while the recovery in Mobility has been uneven.

“While positive on longer-term fundamentals, we believe shares are fairly valued at current levels (6.5x 2022 EV/gross profits),” Kessler wrote.

Needham analyst Bernie McTernan said Uber’s Delivery business continues to carry the company.

“We continue to be bullish on Delivery with UBER adding more verticals quickly in conjunction with mobility returning creating a compelling consumer proposition for an Uber subscription,” McTernan wrote.

Ratings And Price Targets:

• Wedbush has an Outperform rating and $66 target.
• Bank of America has a Buy rating and $71 target.
• Raymond James has a Market Perform rating.
• Needham has a Buy rating and $77 target.
• Morgan Stanley has an Overweight rating and $62 target.
• D.A. Davidson has a Buy rating and $70 target.

(Photo: Uber)