Uber shares tumbled Tuesday after the company posted its second-quarter results before the bell, but analysts at Oppenheimer remain bullish.
The firm reiterated its Outperform rating and $65 price target in a note to clients. Share of Uber, meanwhile, slid 5.7% Tuesday afternoon to $46.63.
The dip in share price comes despite the fact that Uber generated a net income of $394 million, easily beating a projected loss of $49.2 million. The ride-sharing company also achieved its first-ever operating profit of $326 million.
Oppenheimer argued Uber is prioritizing growing its investor base, acknowledging that investors were hoping to see more gross booking upside in the company’s results.
“Uber is clearly prioritizing path to GAAP profitability to trigger S&P inclusion, with desire to begin buybacks, both designed to expand its investor base,” analysts wrote. “Once complete, we expect UBER to lean back into growth in 4Q or 1Q.”
The future, in their view, is bright.
“We believe Uber's superior network liquidity and leading logistics technology are well positioned to capture additional market share in ride-sharing (currently less than 1% of $6.1 trillion total addressable market) and online food delivery (15% of TAM), which remain underpenetrated globally,” the analysts wrote.
“Expansion into new markets, improved freight offering, new transportation solutions, and positive traction with subscription products could be potential near-term catalysts, along with autonomous technology improving marketplace unit economics.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel