Investing.com -- Uber Technologies Inc (NYSE:UBER) is positioned for strong growth across its core businesses, helped by rising margins, expansion in delivery operations, and robotaxi partnerships, says TD Cowen. Shares up more than 3% premarket.
Uber’s core Mobility business is projected to grow in the low- to mid-teens year-over-year on geographic expansion, especially into less dense markets with limited rideshare coverage. Uber noted that about half of the U.S. market remains underpenetrated.
Delivery operation is growing helped by grocery and other verticals, which reached a $7 billion run-rate earlier this year, along with increased frequency, basket size, and membership in the Uber One program. Uber is also focusing on adding merchants and expanding its Delivery footprint beyond the current 35 markets, significantly below the 70+ markets covered by Mobility.
Uber plans to deepen its global self-driving vehicle partnerships, given its scale to support emerging providers. The company operates 14 partnerships worldwide, including Waymo, which launched in Phoenix and is set to expand to Atlanta and Austin in the first half of 2025. Uber recently launched a partnership with WeRide in Abu Dhabi.
Uber’s EBITDA is expected to grow at a 40% rate from 2023 to 2026, with nearly 90% converting to free cash flow.
TD Cowen expects Uber’s cash flow to be $5.9 billion in 2024, rising to $10.1 billion by 2026, supporting accelerating share buybacks, which are expected to ramp up in 2025.
Uber also holds $7.9 billion in equity stakes, which could provide additional capital flexibility.