Uber Analyst Bullish Following Guidance Update, Says Rising Gas Prices Not A Threat

Shares of Uber Technologies Inc UBER gained over 7% on Tuesday morning after the company raised its earnings outlook as the U.S. mobility market continues to recover from the pandemic.

Updated Guidance: In a new 8K filing, Uber raised its guidance for first-quarter EBITDA from an old range of between $100 million and $130 million to a new range of between $130 million and $150 million. Uber also said its Mobility segment bookings should reach 95% of 2019 levels in February.

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On Tuesday, Bank of America analyst Justin Post said he remains bullish on Uber's outlook, but the market remains cautious on the negative impact higher gasoline and food prices could have on Uber's customers.

"Unfortunately, the Ukraine conflict and potential impact on gas prices and consumer spend is driving stock performance, but we would expect the stock to act favorably to any resolution of the conflict," Post said.

Attractive Value: Post noted that Uber shares are attractively valued and are currently trading at around 10 times his 2024 EBITDA estimate.

He said higher gasoline prices will have limited impact on the cost of Uber rides. Uber said even a 40% increase in U.S. gas prices would only increase ride costs by about 2%. In addition, Uber drivers generally drive fuel efficient vehicles, and roughly half of all Uber miles driven come from hybrid or electric cars.

Uber also provided updated long-term financial guidance for investors, including a target of between $165 billion and $175 billion in bookings in 2024. Uber expects its Mobility business to grow in the high 20% range, while its Delivery business grows at around 20% annually.

Bank of America has a Buy rating and $55 price target for UBER stock.

Benzinga's Take: The updated guidance certainly inspired confidence in investors on Tuesday. However, discretionary spending on mobility and delivery would certainly be pressured if inflation and rising oil prices pushes the U.S. into an economic recession at some point.

Uber shares were trading at 30.73, up 7.56% at last check.