UBER With Nobias Technology: Case Study on Uber's Deal with NYC Taxi
Uber (UBER) shares have experienced a significant rally in recent weeks. During the past month, UBER shares are up 17.97%. It appears that much of this bullish sentiment is centered around recent news related to a deal struck between this ride sharing company and taxi companies in New York City. However, even after this recent run-up in share price, UBER shares are still down 18.13% on a year-to-date basis. UBER is down approximately 41.5% from their 52-week highs of $61.50. In the company’s most recent quarter, Uber shifted towards profitability. Since then, we’ve seen a series of analyst upgrades. The credible author and analysts that Nobias tracks with our algorithm continue to express strong bullish sentiment for shares, with an average price target being applied to Uber that represents upside potential of nearly 76%.
In mid-February, Uber posted its Q4/Full-year earnings results, beating analyst consensus estimates on both the top and bottom lines. UBER posted revenue of $5.78 billion, beating Wall Street’s estimate by $420 million, representing 82.3% year-over-year growth. Uber’s non-GAAP earnings-per-share came in at $0.44, beating analyst estimates by $0.77/share.
The company highlighted this profit immediately within the earnings report saying: “Gross Bookings of $25.9 billion, up 51% year-over-year and at the high end of the guidance range. Net income of $892 million, including a $1.4 billion net benefit relating to Uber’s equity investments. Adjusted EBITDA of $86 million was above the guidance range, with Delivery reaching Adjusted EBITDA profitability for Q4”
UBER April 2022
During the Q4 report, Uber’s CEO, Dara Khosrowshahi, said: “Our results demonstrate just how far we’ve come since the beginning of the pandemic. In Q4, more consumers were active on our platform than ever before, Delivery reached Adjusted EBITDA profitability, and Mobility Gross Bookings approached pre-pandemic levels. While the Omicron variant began to impact our business in late December, Mobility is already starting to bounce back, with Gross Bookings up 25% month-on-month in the most recent week.”
Nelson Chai, Uber’s CFO, said, ““We outperformed our quarterly guidance and delivered $540 million of Adjusted EBITDA improvement compared to Q4 of last year. Moving forward, we are poised to continue to grow at scale while expanding profitability.”
Steven Smith, a Nobias 5-star rated author, touched upon Uber’s business model in a recent article published at Modern Readers, saying: Uber Technologies, Inc develops and operates proprietary technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. It connects consumers with independent providers of ride services for ridesharing services; and connects riders and other consumers with restaurants, grocers, and other stores with delivery service providers for meal preparation, grocery, and other delivery services.
In his piece Smith also highlighted recent analyst activity with regard to price target updates for UBER shares. He wrote:
BTIG Research cut their price objective on Uber Technologies from $80.00 to $65.00 and set a “buy” rating for the company in a research report on Thursday, February 10th.
Royal Bank of Canada cut their price objective on Uber Technologies from $65.00 to $50.00 and set an “outperform” rating for the company in a research report on Monday, March 21st. Canaccord Genuity Group cut their price target on Uber Technologies from $75.00 to $65.00 and set a “buy” rating for the company in a report on Thursday, February 10th.
KeyCorp cut their price target on Uber Technologies from $75.00 to $65.00 and set an “overweight” rating for the company in a report on Thursday, January 20th.
inally, JPMorgan Chase & Co. cut their price target on Uber Technologies from $72.00 to $68.00 and set an “overweight” rating for the company in a report on Wednesday, December 15th.
Overall, Smith said, “One investment analyst has rated the stock with a hold rating and thirty have issued a buy rating to the stock. According to MarketBeat, Uber Technologies presently has an average rating of “Buy” and a consensus price target of $64.07.”
On March 21st, 2022, Julian Lin, A Nobias 4-star rated author, published an article at Seeking Alpha which highlighted his bullish thesis on shares. Lin stated, “At around $33 per share, the stock is much lower than the $45 IPO price of 3 years ago. Yet since then, the company has grown revenues by over 30% while improving its cash flow generation profile. With significant torque to an ongoing pandemic recovery, UBER looks highly buyable here.”
Nicholas Ward is a Senior Investment Analyst at Wide Moat Research. He has spent the last 8 years writing about the stock market at various publications, including Seeking Alpha, The Street, Forbes Real Estate Investor, Sure Dividend, The Dividend Kings, iREIT, Safe High Yield, and The Intelligent Dividend Investor.
Lin noted that Uber’s profit margin was a surprise during the company’s recent Q4 report.He wrote, “That surprise non-GAAP profit was largely due to UBER having aggressively rationalized its cost structure during the pandemic, as it was forced to employ cash-preservation strategies when its mobility business came to a stand still. While the company continues to recover from the pandemic, it has sustained its margin improvements.”
This factors into his bullish sentiment. Lin said that Wall Street analysts expect for this profitability growth trend to continue. He wrote, “Wall Street expects UBER to earn a net margin of 8.5% by 2027 and 12% by 2031.” And, looking towards the future, Lin wrote, “Looking ahead, I expect UBER to see continued growth from all 3 of its business lines, with the strongest near term growth coming from its mobility business as travel returns to pre-pandemic levels.” He continued, “As we move beyond the pandemic, investors should return their attention to the fact that ridesharing remains a long term secular growth opportunity, with penetration still very low even in the United States.”
Lin isn’t alone in his bullish bias. 94% of the articles recently posted by credible authors (those with Nobias 4 and 5-star ratings) focused on Uber have included “Bullish” sentiment. And, looking at the credible Wall Street analysts that our algorithm tracks (once again, only those with Nobias 4 and 5-star ratings) we see that the average price target being applied to UBER shares is $63.25.
Today, UBER trades for $32.05. This means that the $63.25 price target mentioned above represents upside potential of more than 95%!
Disclosure: Nicholas Ward has no UBER position. Nicholas Ward wrote this article for Nobias at their request with a view of giving investors a balanced perspective based on the writings of Nobias highly rated analysts and bloggers. Nobias has no business relationship with any company whose stock is mentioned in this article and does not have a position in this stock.
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