Uber Analyst Bets New Verticals, Partnerships Will Drive Q3 Gains

Uber Technologies Inc‘s UBER third-quarter earnings, expected to be released on Oct. 31, are projected to exceed Street estimates slightly.

Bank of America analyst Justin Post maintains a Buy rating on the stock and raised the price target to $96 from $88.

The ride-hailing company should benefit from secular shifts to the sharing economy, time-saving services (i.e., delivery), and a move to more efficient marketplaces such as freight.

Uber should trade at a premium to direct peers, given share leadership and potential network effects.

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Analysts expect bookings of $41.35 billion, revenue of $11.01 billion, and EBITDA of $1.67 billion — all just above consensus expectations.

Uber’s new verticals, like taxi and pool, contribute to growth in Mobility, while partnerships with Costco and Instacart support Delivery. Grocery and retail will likely provide 2 points of growth in Delivery for the third quarter.

On the Mobility side, analysts expect 20% booking growth, a slight deceleration compared to the second quarter due to foreign exchange impacts but supported by the expansion of new verticals such as Reserve, Comfort, and Green. International travel trends also showed improvement, and FX conditions in Europe have stabilized, though Argentina’s peso depreciation remains a factor.

The San Francisco-based company will likely achieve 18% year-over-year growth for the delivery category, driven by steady demand for online orders from grocery and retail partnerships. The market share in this segment is likely to grow, particularly in suburban markets, with Instacart playing a significant role, Post added.

What’s Next: Looking ahead to the fourth quarter, Uber expects:

• Bookings in the range of $42.75 billion to $44.25 billion
• EBITDA guidance of $1.77 billion to $1.87 billion, bracketing Street expectations.
• 9.7% incremental EBITDA margin for the third quarter.

Key focus areas for investors will include Uber’s AV partnership strategy, progress on new Delivery partnerships, and thoughts on competitive trends in the U.S. Mobility market.

Price Action: Uber stock is down 0.66% at $79.88 at last check Wednesday.

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