Uber Analysts Expect Enhanced Earnings and Strategic Buybacks Up To $5B

Keybanc analyst Justin Patterson maintained Uber Technologies Inc UBER with an Overweight and raised the price target from $70 to $79.

For Uber, the analyst expects earnings and its virtual investor update to focus on mid-teens annual gross bookings volume (GBV) growth, modest margin improvements, and a capital allocation program geared toward buybacks.

Patterson expects fourth quarter GBV of $37.1 billion (in line with consensus) with EBITDA of $1.24 billion (slightly above consensus of $1.22 billion). 

Also Read: Uber’s Upward Trajectory, Improved Margins and Ad Revenue To Continue – BofA Analyst Raises Forecast

The analyst noted that expense discipline is driving profitability upside. 

Patterson expects first-quarter GBV guidance of $36.5 billion – $37.5 billion (vs. consensus of $36.5 billion) and EBITDA of $1.30 billion vs. consensus estimates of $1.25 billion. 

The analyst raised the 2024 and 2025 EBITDA by ~1% each due to a slower ramp in operating expenditure and cost of revenue.

He noted that expense discipline and leverage will continue to drive an EBITDA and free cash flow inflection, leading to the price target boost. Thus, he said Uber’s growth and profitability profile warrants a premium to the peer group and a multiple that aligns with Airbnb.

Patterson projected fourth-quarter revenue of $9.75 billion (versus consensus of $9.76 billion) and $0.12 (versus consensus of $0.17).

JMP analyst Andrew Boone expects Uber to report healthy top-line results and broad profitability. He raised the price target from $62 to $75.

As per Boone, driver supply is still a tailwind for take rates and S&M. The analyst noted that competition is rational amongst domestic and global last-mile companies. 

Boone said that all companies are focused on margin expansion and should allow for an upside to profitability as there is less competition for drivers and diners.

The analyst expects Uber’s Investor Update to introduce a new growth framework (high teens growth for mobility and low-teens growth for delivery over the next three years), incremental margins (likely unchanged), and capital return structure (an expected initial $3 billion – $5 billion repurchase authorization).

Boone projected fourth-quarter revenue of $9.75 billion and $0.22.

Mizuho analyst James Lee expects gig economy category leaders for ride-sharing (UBER) to gain share while capitalizing on favorable unit economics due to rational competition.

The analyst reiterated a Buy rating with a $77 price target.

Lee expects UBER to deliver strong EBITDA results due to favorable unit economics, mobility, market share gains from rational competition, and improved efficiency.

Lee projected fourth-quarter revenue of $9.8 billion.

Price Action: Uber shares traded higher by 2.09% to $70.43 on the last check Tuesday.

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