Uber Technologies Inc (NYSE:UBER, ETR:UT8) may have disappointed investors with a wider-than-expected loss for the first quarter and a Gross Bookings guidance miss for 2Q, but analysts remain bullish on the ride-hailing company’s future.
Shares of Uber fell about 8% from $71 following the release of its earnings report and had partially recovered to trade hands at about $67 in the early afternoon on Friday.
Analysts at UBS see weakness in the stock positioning it at a “compelling entry point.”
“While Uber shares are down 8% on a foreign exchange (FX)-driven 2Q 2024 Gross Bookings guidance miss, we see the fundamental thesis on the stock being a multi-platform compounder as intact,” they wrote.
They pointed to strong year-over-year growth in overall and mobility Monthly Active Platform Consumers by 15% and 17% respectively, noting that they expect 2024 to be a frequency-driven year for the sector with new adds tougher as these businesses mature.
“These disclosures suggest Uber continues to bring incremental users to the platform, which as they scale to higher frequency over time, adds to our confidence in Uber's ability to reach or beat mid-term guide,” they wrote.
The UBS analysts repeated their ‘Buy’ rating on Uber but reduced their price target from $100 to $95 on the slower buyback ramp by the company.
Analysts at the Bank of America also awarded the stock a ‘Buy’ rating on their view Uber is poised for stable and healthy growth after the mixed quarter.
They attributed the drop in Uber’s stock post-earnings in part to optimism going into the print on positive Mobility bookings data and competitor Lyft’s bookings beat.
“While Lyft may have closed the bookings gap, and the quarter wasn't as clean as recent quarters, we think Uber delivered strong results headlined by very steady growth, and an outlook that suggests virtually no deceleration ex-FX, better than Internet peers,” they wrote.
“While FX headwinds, heavy in Argentina, likely lower consensus booking estimates, we think margins will more than offset with higher profits/earnings per share.”
The BofA analysts lowered their price objective from $91 to $87 to reflect a slower growth outlook largely driven by FX.