On Tuesday, Citi has increased its price target for Uber Inc. (NYSE: UBER) shares to $96, up from the previous target of $93, while reaffirming a Buy rating on the stock. The revision follows a series of meetings with Uber's Chief Financial Officer Prashanth Mahendra-Rajah and the Vice President of Investor Relations & Corporate Finance, Deepa Subramanian, during a non-deal roadshow (NDR) in the Middle East.
The discussions with Uber's management have bolstered Citi's conviction in the company's ability to meet its compounded annual growth rate (CAGR) targets for Gross Bookings and EBITDA over a three-year period, as outlined during Uber's Investor Update in February.
The firm cites Uber's ongoing investment in its service offerings, expansion into new markets, and the growth of its platform across various products and modalities as key factors supporting these targets.
Citi highlights Uber's strategic focus on increasing the supply of earners – drivers and delivery personnel – as a critical component that is expected to drive user growth and engagement. As Uber's market presence matures, the firm anticipates a rise in Monthly Active Platform Consumers (MAPC) and usage frequency, spurred by the expansion of Uber's service applications worldwide.
Among the noteworthy points from the meetings with Uber's management, Citi emphasizes the potential of new initiatives such as Uber Teen and the subscription service Uber One. Additionally, the firm acknowledges the opportunities presented by autonomous vehicles, which could play a significant role in Uber's future growth and profitability.
In summary, Citi's revised price target reflects its increased confidence in Uber's strategic direction and growth prospects. The firm maintains that Uber continues to be one of its top picks within the Internet sector, with expectations of improved visibility, multiple avenues for growth, and expanding profit margins.
In other recent news, Uber Technologies Inc . (NYSE:UBER) faces a significant legal setback as the 9th U.S. Circuit Court of Appeals in San Francisco upheld a previous court's decision regarding California's gig worker law.
This ruling compels companies to reclassify their drivers from independent contractors to employees, potentially increasing operating costs for Uber. Meanwhile, Mizuho Securities maintains a Buy rating on Uber, anticipating favorable regulatory decisions and robust company fundamentals.
On the other hand, Lyft Inc (NASDAQ:LYFT). has set an ambitious goal for a 15% annual increase in gross bookings through 2027, with a focus on expanding its emerging advertising business. RBC Capital also reiterated an Outperform rating and a price target of $80.00 for Uber, citing strategic growth initiatives and a solid business model.
In the midst of these developments, the California Supreme Court is deliberating over the constitutional validity of Proposition 22, a measure that allows companies like Uber and Lyft to classify their drivers as independent contractors.
The outcome of this case could have significant implications for the gig economy and employment classifications. Uber also announced several new services, including Scheduled UberX Rides, Uber Shuttle for Mobility, and a partnership with Costco (NASDAQ:COST) to expand delivery options. These are the recent developments in the ride-hailing industry.
InvestingPro Insights
In light of Citi's updated price target for Uber, current metrics from InvestingPro provide additional context for investors considering the company’s stock. Uber's market capitalization stands at a robust $143.34 billion, underlining its significant presence in the Ground Transportation industry. With a notable revenue growth of 14.01% over the last twelve months as of Q1 2024, Uber's financials reflect a company on the move. Moreover, the company's gross profit margin during the same period was a healthy 32.36%, showcasing its ability to maintain profitability amidst expansion efforts.
Two InvestingPro Tips that may interest potential investors are Uber's expected net income growth this year and the company's trading at a low P/E ratio relative to near-term earnings growth. These insights suggest that Uber is positioned for a potentially profitable year ahead, and its stock may be undervalued based on its earnings outlook. For those looking to delve deeper into Uber's financials and future prospects, InvestingPro offers additional tips and detailed analyses. Interested readers can unlock more insights with the use of the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 11 more InvestingPro Tips available, investors can gain a comprehensive understanding of Uber's market dynamics and investment potential.
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