Uber Downgraded As Analyst Sees Fewer Near-Term Catalysts After Strong Run

Wedbush analyst Scott Devitt downgraded the rating on Uber Technologies, Inc UBER to Neutral from Outperform with a price target of $85 (from $80) on Thursday.

Uber delivered mixed first-quarter results and healthy guidance for second-quarter on Wednesday.

In the quarter, the company reported gross bookings of $32.8 billion (13.7% Y/Y), at the midpoint of management’s guide and below Street estimates by 1%.

Also Read: Ahead Of Uber Earnings, Analyst Raises Forecast

Adjusted EBITDA in the first quarter of $1.9 billion (16.2% margin) was 1% ahead of initial expectations and slightly below the midpoint of the company’s prior outlook.

Notably, mobility gross bookings growth of +13.5% Y/Y was relatively modest versus estimates, the analyst said.

Next quarter, Uber expects gross bookings growth of +14.5%-18.3% Y/Y, ahead of consensus (+14.3% Y/Y), and adjusted EBITDA of $2.02 billion-$2.12 billion, versus Street estimates of $2.04 billion.

Uber stock appreciated considerably over the last few years as the business model recovered post-pandemic. Notably, the magnitude of beats versus estimates has contracted materially in recent periods as performance has caught up to investor expectations, Devitt noted.

Uber’s management team has demonstrated a successful track record of execution across key initiatives to drive growth during this period. However, the business is now well understood, and the lack of clear catalysts in the near term will limit the upside to expectations in the current environment, curbing further multiple expansions, according to the analyst.

Devitt changed his estimates for the second quarter and 2025. For next quarter, he expects gross bookings of $45.9 billion (+14.8% Y/Y), slightly ahead of the midpoint of management’s guide. His revenue estimate moves up ~3% to $12.4 billion (+15.6% Y/Y), slightly above Street expectations.

He expects adjusted EBITDA of $2.1 billion (16.8% margin), near the midpoint of management’s outlook of $2.02 billion-$2.12 billion. For 2025, Devitt expects gross bookings of $186.4 billion (+14.5% Y/Y), from $183.0 billion (+12.4% Y/Y) previously, while his revenue estimate moves higher by 1%. This year, he anticipates adjusted EBITDA of $8.3 billion (16.6% margin), ~3% higher than his initial estimate.

Price Action: UBER stock is down 1.6% at $82.31 at the last check on Thursday.

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