Summary

  • Broker KeyBanc gave a rating upgrade to Uber Technologies, from ‘sector weight’ to ‘outperform’.
  • KeyBanc stated Uber’s expertise in expense management as a potential driver of growth in EBITDA and positive free cash flow.
  • Uber has recently partnered with some large corporations including Staples, Oracle, Greensboro, and PayPal.

Ride-hailing and delivery company Uber Technologies Inc. (NYSE: UBER) saw its share prices rising by 1.1% after receiving a rating upgrade from broker KeyBanc. KeyBanc Capital Markets upgraded UBER to an ‘overweight’ rating from its previous ‘sector weight’.

Based on expected growth prospects for the tech company, KeyBanc gave its current rating upgrade, matching Evercore ISI’s ‘outperform’ rating. Other brokers maintaining an ‘outperform’ rating on UBER include Fox Advisors, China International Capital, TD Cowen and Wedblush.

Meanwhile, Seaport Global gave the stock a ‘buy’ recommendation, rating it two on five. D.A. Davidson had upped the stock to a ‘buy’ rating on October 3, 2023. Susquehanna Financial also raised its rating on UBER to ‘positive’ on August 2, 2023.

UBER Price Chart; Source: EODHD/Others

KeyBanc maintained a price target of US$ 60 on the stock. UBER closed trade at US$ 47.75 on Friday, November 3, 2023. As at the close of trade on that day, UBER was 2.7% higher intraday and 93% higher on a YTD basis.

Expense discipline to help drive profitability – KeyBanc

KeyBanc emphasized that Uber's commitment to managing expenses will play a pivotal role in boosting EBITDA and generating positive free cash flow. Furthermore, advertising can serve as a tool to maintain competitive pricing and increase the number of customers.

KeyBanc also believes that Uber is well-positioned to capitalize on the growing retail media industry through its budding advertising venture. In addition, the brokerage sees potential for Uber to extend its reach within its current sectors, such as hailables, shared rides, and grocery delivery.

After KeyBanc’s rating upgrade, the mean recommendation rating on UBER stands at 1.8 on five. Here, one represents a ‘strong buy’ rating and five represents a ‘strong sell' rating.

Image Source: ©2023 Kalkine®; Data Source: EODHD/Others

Meanwhile, the consensus mean price target on UBER is US$ 57.51, which is 20% higher than Friday’s closing price.

Robust demand and new growth initiatives drive revenue growth in Q2 2023

For Q2 2023, Uber reported a 14% year-on-year increase in revenue to US$ 9.2 billion. On a constant currency basis, this growth was measured at 17%. Gross bookings also grew 16% year-on-year to US$ 33.6 billion.

Income from operations was reported to be US$ 326 million for the quarter, an increase of US$ 1 billion year-on-year and US$ 588 million quarter-on-quarter. The net income attributable to the company was US$ 394 million, which included a US$ 386 million benefit due to unrealized gains on Uber’s equity investments.

The adjusted EBITDA for the quarter was US$ 916 million, an increase of US$ 552 million, year-on-year. In the next quarter, Uber expects adjusted EBITDA of US$ 975 million to US$ 1.025 billion. The results for Q3 2023 will be announced on November 7, 2023.

The company recently teamed up with Staples to bring office and stationary products to consumers across the US. Some of the other companies that Uber has recently partnered with include Oracle, Greensboro, The Save Mart Companies and PayPal.