On Monday, Jefferies reaffirmed its Buy rating and $100.00 price target for Uber Technologies Inc . (NYSE:UBER), emphasizing the importance of autonomous vehicle (AV) partnerships for the rideshare company's future. Currently trading at $59.93, Uber has significant upside potential according to analysts, with targets ranging from $75 to $120.
InvestingPro analysis indicates the stock is currently undervalued, with 12 additional exclusive insights available to subscribers. The endorsement follows a discussion with AV experts, who provided insights into the technology, regulatory landscape, competition, and the commercialization trajectory of AVs.
The experts, Chris Borroni-Bird and John Kwant, forecasted that AV developers will likely form partnerships with rideshare companies like Uber and Lyft (NASDAQ:LYFT), rather than operating their own robotaxi fleets. As a prominent player in the ground transportation industry with a market capitalization of $126.2 billion, Uber has demonstrated strong financial performance with revenue growth of 16.7% over the last twelve months and maintains a GOOD overall financial health rating according to InvestingPro's comprehensive analysis. They identified three essential roles in the AV industry: software development, vehicle manufacturing, and network management.
Rideshare networks are deemed crucial for maintaining vehicle utilization, minimizing capital expenditures, and consolidating demand. Although large-scale partnerships are not imminent, Uber and Lyft's efforts to diversify their AV partnerships could prevent developers from bypassing the rideshare network fees in the long term.
Operational costs were another focal point, with estimates suggesting that robotaxis could incur costs of approximately $1.20 per mile, leading to an average cost of $17 per trip. This figure is slightly higher than the estimated $15 per trip cost for traditional rideshare services, calling into question the potential for robotaxis to offer lower prices.
The analysts highlighted Waymo as the current leader in the U.S. AV space, benefiting from technological advancements, significant investments from Alphabet (NASDAQ:GOOGL) Inc., and potential synergies with Google and original equipment manufacturers (OEMs). Waymo's partnership with Uber in Arizona, Georgia, and Texas was noted as a positive development. In contrast, Tesla (NASDAQ:TSLA)'s Full Self-Driving (FSD) capabilities were seen as lagging behind Level 4 automated driving technology, leading to skepticism about the company's near-term targets.
Regulatory approval for robotaxis is anticipated to become more favorable under the administration of President Trump, who has previously expressed positive sentiments about the technology. The experts believe that the National Highway Traffic Safety Administration (NHTSA) could initiate a new rule-making process independently or be mandated by Congress to expedite the process.
The recent decision by General Motors to halt its robotaxi development was seen as evidence of the challenges in scaling AV technology. Despite this, Uber is expected to continue collaborating with various AV partners. The company's Chief Financial Officer also mentioned on Wednesday the potential for an expanded partnership with Waymo and projected growth for Mobility Bookings in the high teens to low twenties, excluding foreign exchange impacts, through at least the early quarters of 2025. This growth outlook aligns with Uber's strong fundamentals, including a healthy current ratio of 1.41 and positive earnings expectations.
For detailed insights into Uber's valuation and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro, which provides in-depth analysis of this and 1,400+ other top stocks.
In other recent news, Uber Technologies Inc. has been at the center of several significant developments. Analysts from TD Cowen have reiterated a Buy rating on the company, emphasizing the potential growth in Uber's Delivery segment. Analysts forecast this segment to account for nearly half of the company's core Gross Bookings by 2024.
In addition, General Motors Co (NYSE:GM) announced it will cease funding for Cruise's robotaxi, a development that has implications for Uber due to their previous partnership. Meanwhile, 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.
Simultaneously, BTIG, a financial services firm, maintained its Buy rating on Uber, emphasizing the company's successful strategy in managing insurance costs through fare adjustments.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.