Uber Technologies Inc (NYSE:UBER, ETR:UT8) is “the best idea within the mobility” industry, according to analysts, after the group’s three-year growth targets beat expectations.
Management said it expects gross bookings to grow at a mid to high-teens compound annual growth rate (CAGR), whereas Wedbush analysts had forecast a 14.7% CAGR.
Underlying earnings are predicted to jump at a 30% to 40% CAGR, beating out Wall Street estimates which had placed growth rates at around 37%.
Free cash flow as a percentage of underlying earnings is targeted to be above 90%, around 10 percentage points higher than Wedbush had initially predicted.
It means Uber is now on track to generate US$10 billion of free cash flow by 2026, leaving the US bank confident the ride-hailing app can deliver more capital to its shareholders.
On Wednesday, Uber announced a US$7 billion share buyback, the first in its history, on the same day in which drivers went on strike to fight against the company’s poor pay.
Analysts have also noted how Uber is well-positioned to succeed in international markets, grow its non-UberX mobility products and implement a multi-product offering connected to its loyalty programme, Uber One.
“We come away from the [update] increasingly constructive on the long-term growth trajectory of the business,” Wedbush said.
“We are encouraged by the strength of management's 3-year outlook and continue to view Uber as our best idea within the mobility vertical.”
Wedbush has therefore increased Uber’s target price to $85, rating the company an ‘outperform’.