On Monday, Mizuho Securities sustained its optimistic stance on Uber Inc. (NYSE:UBER), maintaining a Buy rating and a $90.00 price target for the company's stock. The firm's confidence in Uber is underpinned by the belief that the market has exaggerated regional and competitive concerns, and anticipates that upcoming regulatory decisions will be favorable to the company.
The firm's analysis of Uber's performance metrics indicates that the company's fundamentals are robust, holding a leading position in the ride-sharing market. Several factors are expected to act as growth catalysts for Uber. Firstly, the Mobility sector in Latin America is projected to recover in the second quarter of 2024, as difficult comparatives from the previous year are lapped and a shift in holiday timing is likely to ease competitive worries about Didi's presence in the region and possibly in Europe.
Additionally, despite a rise in investment spending, Uber's unit economics are considered to be positive. The supply of drivers currently exceeds demand, insurance costs are becoming more manageable, and advertising is expected to offer additional revenue potential. Furthermore, Mizuho Securities anticipates constructive regulatory outcomes later in the second half of 2024.
Uber's valuation is also seen as attractive by the firm, with the stock trading at 12 times its forecasted FY26 EBITDA. This valuation is considered compelling when compared to its peers, which trade at mid-to-high teens multiples, and with Uber's EBITDA expected to grow at a compound annual growth rate of nearly 40%. The firm's reiterated price target of $90 reflects this positive outlook.
In other recent news, Lyft Inc (NASDAQ:LYFT). has set a goal for a 15% annual increase in gross bookings through 2027, with a particular emphasis on expanding its emerging advertising business. The company's advertising venture has shown a promising 250% revenue growth in the quarter ending March. Meanwhile, Uber Technologies Inc . (NYSE:UBER) has been the subject of positive analyst attention, with RBC (TSX:RY) Capital maintaining an Outperform rating and a price target of $80.00, while Loop Capital reduced its price target from $88.00 to $83.00, but retained a Buy rating.
In regulatory developments, the California Supreme Court is currently deliberating over the constitutional validity of Proposition 22, a measure that allows companies like Uber and Lyft to classify their drivers as independent contractors. The outcome of this case could have significant implications for the gig economy and employment classifications.
In addition to these developments, Uber has announced several new services, including Scheduled UberX Rides, Uber Shuttle for Mobility, and a partnership with Costco (NASDAQ:COST) to expand delivery options. These initiatives are part of Uber's broader strategy to diversify its offerings and increase customer engagement. JMP Securities has maintained a Market Outperform rating for Uber with an unchanged price target of $80.00 in light of these new services.
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