Uber Shares Rise, Analysts Largely Positive After First Quarterly Print

Sell-side analysts and investors remained generally positive on Uber Technologies, Inc. UBER after the newly public ride-hailing company’s first-quarter earnings report, which was broadly in line with expectations, missing slightly on earnings but with a revenue beat.

Of particular interest was the degree to which Uber is interested in moving beyond its core business, with efforts to boost its restaurant food delivery service and its foray into autonomous cars.

The Analysts

Wedbush analyst Ygal Arounian reiterated an Outperform rating on Uber with a $65 price target.

D.A. Davidson’s Tom White affirmed a Neutral rating and lowered the price target from $53 to $46.

The Takeaways

Analysts liked Uber’s expectations for improvement in take rates and adjusted net revenue in its core ride-hailing business, but were also intrigued by the company’s bullishness on its Uber Eats food delivery service.

“A core tenet of our bull thesis is around Uber's ability to morph its ridesharing platform into a broader consumer engine with Uber Eats and autonomous initiatives,” Wedbush’s Arounian said in a Friday note.

“We continue to see this as Uber's biggest differentiator as it is the only one among its competitors that is a leader in both massive opportunities on a global basis.”

The company’s thoughts about the market — which seems to be moving away from competition on price and incentives to one where companies are differentiating on services — also kept the sell-side happy, although not particularly exuberant.

“UBER delivered a solid 1Q '19, and although commentary on moderating competition (and robust contribution profit) in certain markets was constructive, we don't expect buyside estimates to rise meaningfully on the back of last night's print,” said D.A. Davidson’s White.

What it Means for Lyft, Grub

KeyBanc Capital Markets analyst Andy Hargreaves didn’t rate Uber, but drew some takeaways form the quarterly print for two competitors he covers: chief ride-hailing rival LYFT Inc. LYFT, and in the restaurant food delivery business, GrubHub Inc GRUB.

Uber’s suggestion that ride-hailing take rates were stable over the last year and price competition is lessening are a positive for Lyft, the analyst said. 

But the print may not be as positive for GrubHub, which could see a stronger competitor in Uber Eats, Hargreaves said, adding that an Uber cross-platform loyalty program couldn’t be matched by GrubHub.

Price Action

Uber shares were trading higher by 1.51 percent to $40.40 at the time of publication Friday.

Related Links

Uber's First Earnings Report Shows Bigger Than Expected Loss, But Revenue Tops Estimates

Wedbush Initiates Uber At Outperform, Calls It The 'Amazon Of Transportation'

Photo courtesy of Uber.