Wells Fargo Upgrades Uber, Sees More Compelling Price

Shares of Uber Technologies Inc UBER have lost 45% since Feb. 6, versus a 28% decline for the S&P 500, and shares are now attractively priced, according to Wells Fargo.

The Uber Analyst

Brian Fitzgerald upgraded Uber from Equal-Weight to Overweight, while reducing the price target from $45 to $41.

The Uber Thesis

Uber’s value is still dependent on growth trends and this will play out only after the coronavirus-driven disruptions have subsided, Fitzgerald said in a note. He said growing smartphone penetration and continued shift in spend among riders from personal car ownership to ridesharing as favorable trends for the company.

See Also: Ex-Uber Executive Pleads Guilty To Stealing Google's Trade Secrets

Uber is well positioned for the challenging times ahead. Fitzgerald said the company is unlikely to face liquidity issues, as it exited fiscal 2019 with $10 billion of unrestricted cash and has a $2 billion revolver and $1.5 billion in covenant-free debt due in 2023.

Even with an 80% decline in volume in its Ridesharing segment, Uber will still exit fiscal 2020 with $4 billion of unrestricted cash, the analyst said.

“Two-thirds of Uber’s cost structure is variable, creating an automatic shock absorber against decreasing revenues," he wrote in the note.

Fitzgerald expects Uber to emerge from the crisis as a consolidator in the Meal Delivery space.

UBER Price Action

Shares of Uber rose 15% to $23.66 at time of publication Friday.

Loading...
Loading...
UBER Logo
UBERUber Technologies Inc
$89.90-0.29%

Stock Score Locked: Edge Members Only

Benzinga Rankings give you vital metrics on any stock – anytime.

Unlock Rankings
Edge Rankings
Momentum
90.53
Growth
93.58
Quality
-
Value
39.93
Price Trend
Short
Medium
Long
Market News and Data brought to you by Benzinga APIs
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm

Posted In:
Comments
Loading...