On Wednesday, DA Davidson maintained a Buy rating on Uber Inc. (NYSE:UBER) and increased the price target to $84 from the previous $82. This adjustment follows Uber's third-quarter earnings report released on October 31, 2024. The firm's analyst cited the company's performance and growth metrics as the basis for the updated price target, which now reflects a 22x projected 2025 EV/EBITDA multiple.
Uber's subscription service, Uber One, has reached over 25 million members, marking a significant year-over-year increase of approximately 70%. These members contributed to 35% of the combined gross bookings for Uber's Mobility and Delivery services. Additionally, Uber has been active in repurchasing shares, with $375 million bought back under the authorization from February 2024. The company plans to continue repurchasing shares in future quarters with the aim of achieving a durable reduction in share count by 2025.
The company's advertising business has also shown impressive growth, with a nearly 80% year-over-year increase in the third quarter. In terms of partnerships, Uber's CEO Dara Khosrowshahi commented on Waymo's market presence in San Francisco, noting that it holds a high single-digit to low double-digit category share.
Uber's Delivery service reached a milestone in September, with Monthly Active Platform Consumers (MAPCs) exceeding 50 million for the first time. The company also reported that order frequency has increased every year for each of the last six annual cohorts. Regarding potential mergers and acquisitions, both Khosrowshahi and CFO Prashanth Mahendra-Rajah indicated a current disinterest in pursuing large deals. This sentiment was echoed by Barry Diller, chair of Expedia Group's (NASDAQ:EXPE) Board, who stated on November 4 in an interview with CNBC that rumored acquisitions involving Uber are "just not going to happen."
In other recent news, Uber Technologies Inc . (NYSE:UBER) has been the subject of several analyst assessments following its latest earnings report. The company's third-quarter report showcased a mix of performances across different sectors of the business. Despite slower-than-anticipated growth in Mobility bookings, Uber's Delivery services exhibited a 17% growth, and Advertising revenues saw a significant surge, rising nearly 80% compared to the same period last year. The company's effective cost management led to an EBITDA of $1.69 billion, surpassing both the analyst's and the street's expectations by approximately 3%.
Seaport Global Securities maintained a positive outlook on Uber, reiterating a Buy rating while slightly increasing the price target to $82. Goldman Sachs (NYSE:GS) reaffirmed its Buy rating with a $96 price target, citing Uber's ability to scale in its end markets and a trajectory toward higher profitability. BofA Securities adjusted their financial outlook for Uber, reducing the price target from $96 to $93, but maintained a Buy rating. Evercore ISI raised its price target for Uber to $120, maintaining an Outperform rating, following a strong third-quarter performance.
These are recent developments for Uber, indicating sustained growth and solid fundamentals. The company's strong quarterly performance is underpinned by strategic moves to expand into less dense markets and partnerships in the autonomous vehicle space.
InvestingPro Insights
Uber's strong performance, as highlighted in the article, is further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $156.14 billion, reflecting investor confidence in its growth trajectory. This aligns with the InvestingPro Tip that Uber is expected to see net income growth this year, reinforcing DA Davidson's bullish stance.
The company's revenue for the last twelve months reached $41.95 billion, with a notable 16.7% growth rate. This robust top-line performance underscores Uber's ability to expand its market presence and capitalize on its diverse service offerings, including the rapidly growing Uber One subscription service mentioned in the article.
An InvestingPro Tip suggests that Uber is trading at a low P/E ratio relative to its near-term earnings growth, indicating potential undervaluation despite its recent stock price appreciation. This could provide further upside potential, aligning with DA Davidson's increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Uber, providing a deeper understanding of the company's financial health and market position.
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