On Thursday, an analyst from TD Cowen maintained a positive outlook on Uber Technologies Inc . (NYSE: NYSE:UBER), reiterating a Buy rating and a $90.00 price target for the company's shares. With a market capitalization of $128.8 billion and analyst targets ranging from $75 to $120, InvestingPro data suggests the stock is currently undervalued. The analyst highlighted the substantial growth opportunities within Uber's Delivery segment, which is projected to account for approximately 47% of the company's core Gross Bookings (GB) in 2024, according to the firm's estimates.
The analyst forecasts that Uber's Core Delivery bookings will experience a low to mid-teens year-over-year increase from 2024 to 2027. This aligns with the company's strong revenue growth of 16.7% over the last twelve months and projected 17% growth for fiscal year 2024, according to InvestingPro data. This growth is expected to be fueled by new initiatives such as Grocery and other verticals, which have already achieved a $7 billion GB run-rate as of February 2024. The positive trend is further supported by six consecutive quarters of accelerating Monthly Active Platform Consumers (MAPC) growth, witnessed in the third quarter of 2024.
Uber's strategy for expanding its Delivery services includes adding more merchants in existing geographical areas, extending its reach beyond the current 35 markets—significantly less than the Mobility segment's presence in over 70 markets—and increasing the number of Uber One members, which currently represent half of the total Delivery GBs.
The analyst's comments emphasize the potential for continued growth in user base, frequency of use, and average basket size within the Delivery segment. This optimism is backed by Uber's ongoing efforts to diversify its offerings and penetrate deeper into markets where its Delivery services are already available, as well as by expanding into new territories.
In other recent news, Uber Technologies Inc. has been at the center of several significant developments. General Motors Co (NYSE:GM) announced that it will cease funding for the development of Cruise's robotaxi, a decision that has implications for Uber due to their previous partnership. This decision led to a decrease in Uber's stock, as noted by Bank of America (NYSE:BAC) analyst Justin Post.
Simultaneously, Waymo, an autonomous driving technology company, revealed plans to expand to Miami in collaboration with Uber-supported Moove, a move that Jefferies, a financial services company, believes could benefit Uber. Jefferies reaffirmed a Buy rating on Uber, citing its robust revenue growth and healthy cash flow.
However, Waymo's expansion has also led to a decline in Uber's stock, as the move adds competitive pressure in the autonomous vehicle services sector. This was echoed by another analyst who pointed out potential challenges Uber may face from autonomous vehicle services like Waymo and Tesla (NASDAQ:TSLA).
Lastly, BTIG, a financial services firm, maintained its Buy rating on Uber, emphasizing the company's successful strategy in managing insurance costs through fare adjustments. Despite these various developments, Uber continues to navigate the competitive ride-sharing landscape while exploring new avenues for expansion.
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