On Wednesday, Citi expressed a favorable outlook on Uber Inc. (NYSE: UBER) stock, increasing the price target to $98 from $96 while maintaining a Buy rating. The adjustment follows Uber's second-quarter results, which surpassed expectations, demonstrating significant growth in both the Mobility and Delivery segments.
Uber's quarterly performance highlighted a robust demand trend, with Gross Bookings (GB) in Mobility and Delivery growing by 27% and 17% year-over-year, excluding foreign exchange impacts, respectively. This was supported by a 14% year-over-year increase in Audience growth and a 6% expansion in Frequency.
The company's diversified product portfolio, including Uber One, which represents 32% of GBs excluding Freight, is becoming increasingly habitual among users. Notably, 35% of Monthly Active Platform Consumers (MAPCs) are utilizing multiple Uber products, indicating a strong consumer engagement with the brand.
Citi's analysis underscored that despite the ongoing debates about macroeconomic conditions and the potential influence of Autonomous Vehicle (AV) networks, Uber's management has not observed any significant consumer challenges.
Citi believes that Uber's substantial size and scale make it an essential partner for AV networks to achieve utilization. The firm anticipates more AV providers will enter the marketplace, further supporting Uber's growth trajectory.
In summary, with the latest financial results and strategic positioning, Uber continues to be a top pick for Citi, as reflected in the reiterated Buy rating and the raised price target.
In other recent news, Uber Technologies Inc . (NYSE:UBER) reported substantial growth in its second quarter of 2024. The company's gross bookings rose by 21% on a constant currency basis, while its adjusted EBITDA witnessed a notable increase of 71% year-over-year.
Uber's CEO, Dara Khosrowshahi, highlighted the company's resilience in potential economic downturns and discussed ongoing talks with global autonomous vehicle (AV) players to join its platform.
Furthermore, Uber's delivery business continues to be profitable, with growth driven by operational improvements and advertising revenue. The company has also improved its category position in delivery in its top 10 markets and has reached an independent contractor agreement in Massachusetts. While the company's newer products, including AV, have lower margins, they are expected to scale and reinvest profits.
These are among the recent developments at Uber, which plans to expand into new geographies while maintaining its operating framework. The company is targeting mid to high teens gross bookings growth and 30% to 40% EBITDA growth over the next three years. However, the company acknowledges that AV is not expected to generate substantial profits in the near term.
InvestingPro Insights
In light of Citi's optimistic assessment of Uber Inc. (NYSE: UBER), it's noteworthy to consider additional financial metrics and expert insights from InvestingPro. Uber's market capitalization stands at an impressive $135.55 billion, showcasing its substantial presence in the market. The company's P/E ratio, while high at 64.24, is balanced by expectations of net income growth this year, which could indicate potential for increased earnings efficiency in the near future. Furthermore, Uber's revenue growth remains robust, with a 14.44% increase in the last twelve months as of Q2 2024, underscoring the company's strong performance despite economic uncertainties.
InvestingPro Tips suggest that while Uber is trading at a high earnings multiple, analysts predict the company will be profitable this year, confirming Citi's positive outlook. Additionally, Uber is recognized as a prominent player in the Ground Transportation industry, which may bolster investor confidence in its market leadership and innovative offerings. For those interested in a deeper analysis, there are an additional 10 InvestingPro Tips available, which provide a comprehensive view of Uber's financial health and market position.
These insights and data points offer a broader context for investors considering Uber's stock, complementing the analysis provided by Citi and enriching the overall perspective on the company's potential.
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