On Monday, Citi reaffirmed its confidence in shares of Uber Technologies Inc . (NYSE:UBER), maintaining a Buy rating and a $98.00 price target for the company's shares. This endorsement comes in the wake of Uber's announcement of a $1.5 billion Accelerated Share Repurchase (ASR) program, which is expected to conclude within the first quarter of 2025. The ASR initiative is a portion of Uber's broader $7 billion repurchase authorization.
The ASR is anticipated to bolster the company's stock, particularly with Uber's management projecting growth in its Mobility Gross Bookings to be in the low-20s to high teens, excluding foreign exchange impacts, through the first half of 2025.
Despite ongoing concerns surrounding the demand for autonomous vehicles (AV) and the challenges of market expansion, Citi believes that the share repurchase reflects positively on Uber's free cash flow (FCF) profile.
Citi's analysis suggests that Uber's robust FCF could potentially lead to an increase in the company's current $7 billion repurchase authorization. The firm's stance is supported by the belief that demand for Uber's Mobility and Delivery services remains strong. With Uber's stock trading at approximately 12 times Citi's estimated 2026 EBITDA, the firm sees continued value in the investment.
The ASR program is a strategic move by Uber to reduce the number of shares outstanding, thereby potentially increasing the value of remaining shares. This financial maneuver is part of Uber's ongoing efforts to optimize its capital structure and deliver value to its shareholders.
Uber's focus on growth in its Mobility segment, despite the uncertainties in the autonomous vehicle sector, aligns with Citi's positive outlook on the company's performance and market position. As the ASR progresses, investors will likely monitor Uber's financial health and the impact of the share repurchase on its stock performance.
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