Analysts See Uber's Momentum in Mobility and Delivery as Key to Long-Term Growth, Despite Mixed Q4 Guidance

Truist Securities analyst Youssef Squali maintained Uber Technologies Inc UBER with a Buy and lowered the price target from $60 to $58.

The re-rating reflected solid 3Q23 results and 4Q23 guide, showing strong momentum across Mobility and Delivery in 3Q and into October, driven by a healthy consumer, traction with new products, and improving operational efficiencies. 

Adjusted EBITDA margins hit a record high with positive GAAP operating income (2nd consecutive quarter), putting Uber on a trajectory well above its FY24 target. Growth in Delivery and Mobility use cases with the success of Uber One are yielding higher order frequency and LTV, which should sustain demand top-line growth and substantial margin accretion through 2027.

The analyst projected Q4 revenue and EPS of $10.13 billion (prior $9.81 billion) and $0.12.

Needham analyst Bernie McTernan reiterated a Buy rating and increased the price target to $63 from $60.

The re-rating reflected better than expected 3Q results, showing bookings acceleration and a tone of runway for continued growth in the coming years, especially in Mobility, which is a crucial focus for investors. However, 4Q guidance implies deceleration, and the analyst expects the trajectory of bookings growth to continue to be a critical debate on the stock. 

McTernan increased his constant currency bookings growth in FY24E (from +16% to +19%), which, along with slightly higher margins, moves his adjusted EBITDA estimates higher by +6%, highlighting his thesis on profitable growth on the stock.

The analyst projected Q4 revenue and EPS of $9.73 billion and $0.12.

Mizuho analyst James Lee reiterated a Buy rating with a price target of $63.

Results indicate that UBER had a solid quarter. Still, given the elevated investor expectations, into the call, the analyst is focused on competition with Lyft, the impact of geopolitical uncertainty, and the state of consumer spending.

Morgan Stanley analyst Brian Nowak reiterated an Overweight rating and price target of $62.

Uber's businesses continue to surprise to the upside and accelerate as core and emerging products reinforce the durability of UBER's growth algo. Nowak sees this, combined with improving unit economics and disciplined growth, leading to strong multi-year FCF growth.

Roth MKM analyst Rohit Kulkarni reiterated a Buy rating with a price target of $62, up from $61.

Uber shares closed +3.7% Tuesday (vs. S&P 500 +0.28%), approaching a 52-week high as the company reported an impressive beat and raised quarter with upside to Bookings, EBITDA, and underlying metrics. Kulkarni's estimates grind higher. 

UBER trades at a mid-teens multiple on our revised FY24E EBITDA. Kulkarni notes that the Street continues to underestimate the EBITDA impact from advertising and subscription growth, rising synergies between Delivery and Mobility, and its improving category position in target segments.

The analyst projected Q4 revenue and EPS of $9.73 billion (prior $10.17 billion) and $0.13 (prior $0.25).

Price Action: UBER shares traded lower by 0.60% at $49.62 on the last check Wednesday.