On Friday, Mizuho Securities maintained its Outperform rating and $90.00 stock price target for Uber Technologies Inc . (NYSE:UBER), following reports of the company's potential interest in acquiring Expedia Group Inc. (NASDAQ:EXPE).
The analyst from Mizuho highlighted the synergies and challenges of such a deal, noting that while both companies operate within the travel sector and could benefit from cross-selling opportunities, there are complexities involved in integrating the two businesses.
The analyst pointed out that the online travel agency (OTA) business requires a distinct sales operation, which may not align seamlessly with Uber's current model. Additionally, the integration of customer-facing platforms could present challenges.
Despite these potential hurdles, the analyst reiterated the positive outlook for Uber, supporting the $90 price target based on a 17 times forward-year enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple for the fiscal year 2026.
The report also mentioned that expanding into the grocery delivery market at a larger scale might be a more strategic move for Uber, considering possible changes in regulatory landscapes. However, the analyst maintained a Neutral stance on Expedia, with a price target of $135, derived from an 8 times FY26 EV/EBITDA multiple.
The news comes as Uber continues to explore growth opportunities beyond its core ride-sharing business. The company has previously ventured into areas such as food delivery with Uber Eats and has shown interest in other sectors that complement its existing services.
The potential acquisition of Expedia would mark a significant expansion into the travel industry, but as noted by Mizuho, the decision would require careful consideration of the operational integrations involved.
In other recent news, Uber Technologies Inc. has been a subject of numerous analyst reviews. Truist Securities maintained its Buy rating on Uber, despite expressing skepticism over the company's potential interest in acquiring Expedia Group Inc.
Truist also increased Uber's price target from $88 to $99, citing strong demand and continuous enhancements to its platform. BMO Capital and Jefferies have also maintained positive ratings on Uber, with respective price targets of $92 and $100, despite the announcement of Tesla (NASDAQ:TSLA)'s Cyber Cab.
Uber's recent legal challenges include the U.S. Supreme Court's rejection of the company's appeal against California lawsuits alleging misclassification of drivers as independent contractors. Despite these setbacks, Uber continues to partner with autonomous technology startups like Avride to expand its self-driving technology network.
In terms of financial strategies, Uber's higher free cash flows and a substantial $7 billion buyback program were recognized by Truist Securities as supportive of a higher long-term valuation. The company's partnerships with Alphabet (NASDAQ:GOOGL)'s Waymo, Chinese firm WeRide, and Darden Restaurants (NYSE:DRI) further highlight Uber's commitment to growth and innovation.
These recent developments reflect Uber's resilience and adaptability in the face of legal challenges and a rapidly evolving market landscape.
InvestingPro Insights
As Uber Technologies Inc. (NYSE:UBER) explores potential growth opportunities, including the rumored acquisition of Expedia, InvestingPro data provides additional context for investors. Uber's market capitalization stands at an impressive $167.86 billion, reflecting its dominant position in the ground transportation industry. The company's revenue for the last twelve months as of Q2 2024 reached $40.06 billion, with a solid revenue growth of 14.44% over the same period.
InvestingPro Tips highlight Uber's financial strength and market performance. The company is expected to see net income growth this year, and analysts predict profitability for the current fiscal year. This aligns with Mizuho's positive outlook and $90 price target. Additionally, Uber has demonstrated a strong return over the last year, with a one-year price total return of 85.81% as of the latest data.
While Uber's P/E ratio of 82.83 suggests a high earnings multiple, an InvestingPro Tip indicates that the company is trading at a low P/E ratio relative to near-term earnings growth. This could be particularly relevant as Uber considers expansion strategies, such as the potential Expedia acquisition or growth in the grocery delivery market.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Uber, providing a deeper understanding of the company's financial health and market position.
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