On Friday, Tigress Financial Partners updated its outlook on Uber Inc. (NYSE: UBER), lifting the 12-month price target to $96 from the previous target, while sustaining a Buy rating on the stock.
The revision follows Uber's announcement of its first-ever share repurchase authorization of $7 billion and comes after the company reported its first profitable year.
The firm highlighted Uber's continued dominance in the ridesharing and delivery sectors as key drivers for user growth and increased frequency of use. These factors are expected to contribute to strong booking growth trends over the next three years. Uber's expansion into additional business lines, such as grocery and retail, is also seen as a significant growth contributor, with grocery and retail gross bookings now at a $7 billion run rate.
Uber's strategy to enhance its ridesharing and delivery platform with new product innovations, particularly focusing on subscription services and advertising revenue, is noted as part of its core growth strategy. The use of artificial intelligence (AI) to optimize service platforms and customer engagement is expected to further boost the company's performance.
The report also points out that Uber's ability to cross-leverage its customer base between its rideshare and delivery services has been effective. Approximately 31% of Uber Eats customers were sourced from the Rides app, and 22% of first-time Mobility trips originated from Uber Eats users. The Uber One membership program, which boasts 19 million members across 25 countries, is also highlighted for its significant contribution to the delivery of gross bookings and member spending.
Lastly, Uber's ongoing investments in research and development (R&D), new product introductions, and strong brand equity are recognized as factors that will continue to drive business performance trends, economic cash flow, and return on capital. This is expected to lead to growing economic profit and long-term shareholder value creation. The firm anticipates a potential return of 35% from current levels with the new price target.
InvestingPro Insights
Uber Technologies Inc . (NYSE: NYSE:UBER) has shown promising financial metrics that align with the positive outlook from Tigress Financial Partners. The company's market capitalization stands strong at $144.32 billion, reflecting investor confidence. Notably, Uber's net income is expected to grow this year, an optimistic sign for potential investors. This aligns with the company's first profitable year and may be a contributing factor to Tigress Financial's raised price target.
Investors may also find Uber's valuation metrics of interest. While the company's price-to-earnings (P/E) ratio is high at 75.37, its PEG ratio, which measures the P/E relative to earnings growth, is more moderate at 0.67—suggesting that the company's earnings growth could justify the higher P/E ratio. Moreover, Uber's significant revenue growth of nearly 17% over the last twelve months as of Q1 2023 indicates a robust expansion in its business operations.
For those considering adding Uber to their portfolio, there are additional InvestingPro Tips to explore, such as the company's position as a prominent player in the Ground Transportation industry and its high return over the last year. Investors can unlock more insights and tips on Uber by utilizing the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where 12 more InvestingPro Tips are available to guide investment decisions.
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