Uber Delivery Service Key For Growth, Analysts Say After Mixed Q4

While mobility continued to decline in the fourth quarter for Uber Technologies Inc UBER, strength was shown in the company’s delivery business. Analysts are out with comments and reactions to the fourth-quarter earnings, as well as thoughts about what’s next.

The Uber Analysts: Raymond James analyst Aaron Kessler reiterates a Market Perform rating.
Wedbush analyst Daniel Ives has an Outperform rating and raised the price target to $76.
Needham analyst Chris Pierce has a Buy rating and raised the price target to $75.
KeyBanc analyst Edward Yruma has an Overweight rating and raised the price target to $75.

Analysts on Earnings: Uber reported a mixed quarter with mobility recovery remaining slow and delivery business seeing significant growth.

Mobility recovery remains gradual, said Kessler.

Uber is setting the stage for a “snapback in growth and profitability” heading into 2022, said Ives: “We view Uber’s 4Q results and profitability trajectory for 2021 as another major step in the right direction."

The negative from the fourth quarter report was a lack of timeline to profitability, he added.

Related Link: Analysts Bullish On Lyft With Profitability In Sight

Delivery the Key: Analysts say the trend is its growing delivery business. Delivery bookings grew 15% year-over-year in January. The take rate on deliveries also increased 21 basis points to 13.5% in the fourth quarter.

“Uber can ultimately be a major partner for last-mile logistics on everything from restaurants to distribution through retail footprints,” Ives said.

The delivery opportunity is way bigger than just restaurants, Ives added. Postmates, which was acquired by Uber, has Walmart Inc WMT, Apple Inc AAPL and 7-Eleven as partners. Delivery as a service was 18% of Postmates revenue last year.

Grocery is the next leg of growth for Uber’s delivery, Pierce said. The analyst is looking for clarity on how long delivery can continue to grow.

“Delivery has shown no signs of slowing as select economies have reopened, and Uber looks to push grocery as its next frontier,” Pierce said.

“We think delivery can maintain solid growth post-pandemic, and select international markets show pre-Covid-19 performance can return quickly within mobility,” Yruma said.

The analyst calls delivery the future of transportation with Uber’s opportunities across its Postmates, Cornershop, Eats and recently acquired Drizly businesses. Uber is well positioned to cross-sell to its engaged customers, Yruma added.

Price Target: Shares of Uber closed down 3.9% to $60.71 on Thursday.

(Photo: Uber)