By Sam Boughedda
Piper Sandler analysts upgraded Uber (NYSE:UBER) to Overweight from Neutral and downgraded DoorDash Inc (NYSE:DASH) to Underweight from Neutral in a note to clients Monday.
They also raised the price target on Uber to $33 from $31 and slashed DoorDash's price target to $40 per share from $227.
They told investors that the firm suggests pairing Uber against DASH, while vehicle prices are at near all-time highs, and a quick reversion to historical pricing seems unlikely.
In addition, the firm believes consumers, pressured by rising car prices, will increasingly choose to hail rides instead of replacing old vehicles.
"Expensive cars may force consumers to consider alternative forms of mobility," wrote the analysts. "In November, the average price of a new car was ~$49k in the United States. And while used car prices have "rolled over," the REAL price of buying a used car is still rising (at least if financed using a loan)."
"Factors impacting vehicle affordability include: 1) an inflationary shift toward made-in-USA electric vehicles; 2) higher monthly payments due to rising interest rates; 3) persistent chip shortages curtailing new car production; 4) poor availability of used cars due to sluggish new vehicle sales in 2020-2022," they said, adding that Uber is the firm's number one way of investing in the theme.
On DoorDash, the analysts explained that while they believe doorstep delivery platforms "will unlock exciting long-term opportunities" which will benefit DoorDash, the "outside-the-box revenue streams" aren't yet material enough to offset recession-induced headwinds.