Tigress Financial Partners analyst Ivan Feinseth lifted the price target for Uber Technologies (NYSE:UBER) stock to $96 (39.2% upside) from $72 in his April 19 report. The five-star analyst cited the company’s leading position in the ride-sharing and delivery market and the scope to enter new verticals and markets as the thesis for his bull stance. Furthermore, Feinseth is impressed by Uber’s recently announced stock buyback plan of $7 billion, after the company reported its first-ever profitable year.
Feinseth ranks 297 out of more than 8,700 analysts ranked on TipRanks. He also boasts an attractive 10.9% average return per rating in the past year, with a success rate of 58%.
First, a Little About Uber Technologies
Uber is the pioneer in the Transportation-as-a-Service (TaaS) provider segment and continues to dominate the market. Uber operates ride-hailing, courier delivery, food and personal items delivery services, and freight transportation services. In the past year, UBER shares have zoomed 124.8%, backed by a pick-up in travel demand and back-to-office culture.
Uber boasts 6.8 million monthly active drivers and couriers globally. It handles over 28 million trips per day taken by 150 million monthly active platform users. As of date, Uber has $150 billion in annualized run rate gross bookings.
Feinseth’s Bull Case for Uber
Feinseth is encouraged by Uber’s entry into other complementary verticals, such as food delivery, which enables drivers to take up delivery orders as well. As per the analyst, over 33% of Uber’s existing customers use the Uber app for multiple services, spending 3.4x more than an average customer spend. Going forward, Uber’s primary aim is to cross-sell its ride-hailing services to Uber Eats customers and vice-versa while also adding new customers to both segments.
At the same time, Uber is making efforts to increase the supply of drivers and expand its ridesharing base, supported by increased subscription services, innovation, and artificial intelligence (AI)-enabled platform. The company also benefits from its Uber $100 guaranteed on-time service. The analyst highlighted that one in five U.S. airport drop-offs reserved take advantage of this service, with less than 1% missing a pickup.
Most importantly, Uber is generating strong revenue from its recently launched in-car tablet advertising. It plans to expand this option to additional markets.
Looking ahead, Uber plans to leverage AI to further bring down customer support costs. The company expects lower user acquisition costs to drive additional margin expansion.
Uber’s Financial Position Gets Stronger with Time
In FY23, Uber’s net sales rose 16.9% annually to reach $37.28 billion, aided by demand momentum. Feinseth forecasts a 21% jump in net sales in the next twelve months, reaching $45.12 billion.
Meanwhile, Uber’s net operating profit after tax (NOPAT) turned positive in FY23 and reached $1.44 billion. Feinseth projects a 75.6% jump to $2.52 billion in Fiscal 2024.
Uber is set to release its Q1 FY24 results on May 8, before the market opens. The Street expects Uber to post diluted earnings of $0.22 per share on net sales of $10.06 billion.
Is Uber Stock Expected to Rise?
Based on the average Uber Technologies price target of $87.19, UBER stock is expected to rise 26.4% in the next twelve months. Also, UBER commands a Strong Buy consensus rating on TipRanks based on 34 Buys and two Hold ratings.
Ending Thoughts
With travel and back-to-office trends in full swing, demand for Uber’s services is expected to witness elevated momentum. Feinseth is highly optimistic about Uber maintaining and growing its leading position in the ridesharing and delivery services of the TaaS segment, setting a high price target on the stock.
