Mobility company Uber Technologies UBER reported first-quarter financial results, with revenue beating consensus estimates from analysts. Here’s a look at what analysts are saying after the report.
The UBER Analysts: RBC analyst Brad Erickson has an Outperform rating and a price target of $46.
Susquehanna analyst Shyam Patil upgrades shares from Neutral to Positive and raises the price target from $40 to $48.
Mizuho analyst James Lee has a Buy rating and raises the price target from $50 to $55.
William Blair analyst Ralph Schackart has an Outperform rating and no price target.
Needham analyst Bernie McTernan has a Buy rating and raises the price target from $54 to $56.
Related Link: Uber CEO On What's Driving Accelerated Growth, Timetable For Profitability, AI Potential
The Analyst Takeaways: Erickson said the debate for Uber is the “durability of top-line growth,” which doesn’t show signs of slowing down currently.
“Uber beat & raised and importantly, frequency is showing better-than-expected improvements,” Erickson said.
Positives in the quarter were the increased frequency, declines in driver incentives and insurance deleverage.
The analyst also said that cost discipline is helping with margin flow-through.
“This will continue to give investors confidence in upside to ‘24’s EBITDA targets with significant growth again in ’25 to the degree that rising frequency remains a durable trend,” Erickson added.
Patil called Uber's first quarter solid, with profitability ramping up.
"The company is seeing continued solid top-line traction while demonstrating discipline on the cost side," Patil said. “It’s clear the company’s positioning continues to strengthen, while simultaneously showing improving operating leverage.”
Highlights in the quarter for Patil were bookings growth, EBITDA growth, cost discipline and second-quarter guidance.
“Based on the results, guidance, management’s commentary, we are raising our 2023 revenue estimate by 2% and EBITDA by 5%.”
Lee raised the price target on Uber, noting a favorable outlook and disciplined cost approach shown in the first quarter.
“With macro uncertainties, Uber leveraged its scale to lower driver incentives and optimize customer acquisition costs to drive margin expansion,” Lee said.
The analyst said the company also showed positive momentum of higher margin products like airport rides and Uber Reserve in the quarter.
Uber is one of the top picks from Lee thanks to its disciplined capital allocation and what the analyst calls an attractive valuation.
Schackart said Uber showed strength in its U.S. and Canada segments, which lagged behind other regions for post COVID-19 recovery in 2021 and 2022.
“US and Canada trips grew 40% in the first quarter, outpacing overall trends in the mobility segment,” Schackart said.
Along with the growth in North America and other regions, Schackart also pointed to Uber showing growth in new segments.
“Investment in new verticals (e.g. grocery, convenience, and alcohol delivery) continues with this segment exceeding $5 billion of annualized gross bookings in the quarter, up roughly 35% on a year-over-year and constant currency basis.”
Advertising was also seen as a strength in the quarter for the company, with over 345,000 businesses now using Uber, a base that is up over 70% year-over-year, the analyst noted.
“During the quarter, many new advertisers joined the platform during one of the most significant advertising moments of the year (the Super Bowl),” Schackart said.
McTernan raises the price target on Uber shares after the first quarter financial results.
“Historically, Uber shares have underperformed in between earnings; we think this time could be different as we look for upcoming positive adj. EBITDA estimate revisions to be one some of the largest of the past few years,” McTernan said.
The analyst sees margin growth as one of the keys to Uber shares providing value to investors in the future.
UBER Price Action: Uber shares are up 3.6% to $37.85 on Wednesday, versus a 52-week trading range of $19.90 to $37.58.
Read Next: Uber's 2023 Lost And Found LIst: Rare Food Items, Slushy Machine, Light Saber And Of Course Weed
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