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3 Uber Analysts Talk Q3 Delivery Outperformance, Prop 22 Passage

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3 Uber Analysts Talk Q3 Delivery Outperformance, Prop 22 Passage

Analysts were raising their price targets on Uber Friday after the company reported third-quarter earnings led by strong growth in the delivery segment.

Uber Delivery The Standout: The delivery business for Uber Technologies (NYSE: UBER) reported 125% year-over-year revenue growth in the third quarter.

Wedbush analyst Daniel Ives said the delivery segment “continues to be a major bright spot for Uber.”

Ives, who raised the price target on Uber from $41 to $49, said Uber is growing faster than competitors in the food delivery business.

The benefit of a diversified model was shown in the third quarter, with delivery helping offset the weakness of mobility for Uber, the analyst said.

Needham analyst Brad Erickson said "delivery was the clear outperformer" for Uber. 

Erickson, who raised the price target on Uber from $42 to $50, said Uber’s quarterly report indicated likely share gains from Grubhub Inc (NYSE: GRUB).

BofA Securities analyst Justin Post said Uber’s quarter suggests market share gains for the company’s delivery business in the United States and International markets.

Post raised the Uber price target from $44 to $49.

Related Link: Jim Cramer Gives His Bullish Thoughts On Uber, T-Mobile

Prop 22 Removes Overhang For Uber: The passing of Proposition 22 in California “removed one of the biggest overhangs over the stock,” said Ives.

With the “Prop 22 overhang behind us,” Erickson said Uber deserves a higher multiple. 

BofA's Post said: “The big takeaway from this week is the significant margin of victory for Prop 22, which lowers regulatory classification risk.” 

Uber now has less business model risk for the mobility segment, the analyst said. 

What’s Next For Uber: Ives said the ridesharing business is showing signs of a rebound.

Erickson said Uber called out being on a path to quarterly profitability by 2021 for the first time.

Three corporate deals announced with Uber Eats represent a “meaningful incremental channel as the world steadily returns to work,” the analyst said. 

Post said “there is strong evidence that Mobility will recover when COVID cases fade.”

UBER Price Action: Shares of Uber are up 6.89% Friday to $44.85. Shares hit a new 52-week high of $45.38 earlier in the session. 

Courtesy photo. 

Latest Ratings for UBER

DateFirmActionFromTo
Jan 2021Morgan StanleyMaintainsOverweight
Jan 2021BTIGMaintainsBuy
Dec 2020KeyBancMaintainsOverweight

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