Uber Technologies Inc (NYSE:UBER, ETR:UT8) is well-positioned for growth in 2025, according to a Bank of America analyst note, which reiterated a "Buy" rating and slightly lowered the price objective to $93 from $96 due to foreign exchange (FX) pressures.
The report highlighted that Uber underperformed the Nasdaq in 2024, largely due to concerns around autonomous vehicles (AV). However, Bank of America believes these worries are "likely overdone."
“We expect new AV partnerships in '25, new Waymo markets, and AV progress at other OEMs,” the analysts wrote, while cautioning that progress in AVs remains the biggest factor influencing the stock.
The note outlined several potential positives for Uber this year, including long-term supply benefits from a shift in AV sentiment, traction in its AV partnership strategy, and innovation in new business verticals. Other drivers include favorable regulatory changes under the Trump administration and a strong margin story, with capital returns expected to accelerate.
Uber screens well on P/E/G valuations, the analysts noted, referring to its valuation metrics compared to peers.
Despite the optimistic outlook, the analysts pointed to risks, including the potential launch of Tesla’s Level 4 autonomy network and Waymo announcing new markets without Uber’s involvement. Other risks include potential FX headwinds, labor market challenges due to immigration policy changes, and rising insurance prices that could test consumer elasticity.
What's in store for Q4
Ahead of Uber's February 5 earnings release, Bank of America projected bookings, revenue, and adjusted EBITDA of $43.3 billion, $11.6 billion, and $1.85 billion, respectively, which align closely with Wall Street estimates.
For the first quarter, the analysts expect bookings in the range of $42 billion to $43.5 billion and adjusted EBITDA between $1.8 billion and $1.9 billion. These estimates were revised lower due to an anticipated 3.5 percentage-point FX headwind.
With Uber trading at 15 times 2026 price-to-free cash flow, compared to 29 times for FANG stocks, Bank of America believes there is room for multiple expansion. The note emphasized that steady growth, margin improvements, and a more stable AV narrative could help unlock this potential.
“Valuation seems to reflect a big AV overhang,” the analysts said. “We see opportunity for multiple expansion on steady growth and margin improvement in '25.”