Uber Technologies Inc (NYSE:UBER) shares drove higher on Tuesday after the company announced robust third quarter ridership numbers and projected fourth quarter earnings, causing US broker Oppenheimer & Co to reiterate its rating of ‘Outperform.’
Oppenheimer raised the share price target to US$45 from $42, as Uber stock hit a day high of US$31, settling down to $30 later in the session, up by 12.9%.
San Francisco-based Uber’s third quarter revenue rose by 72% year over year to US$8.3 billion, but missed on Wall Street expectations for gross, mobility, delivery and freight bookings. However, the company announced it expects gross bookings to jump 23% to 27% year-over-year in 4Q.
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The company forecast fourth-quarter adjusted EBITDA between $600 million and $630 million. Analysts were expecting $569.39 million, according to Refinitiv data.
In a note to clients, Oppenheimer analysts said Uber continues to execute on marketplace improvements, profitability and growth, despite weakening macroeconomics in Europe.
“Even with 160 basis points of additional FX (foreign exchange) headwinds causing bookings to come in 2% below Street forecast, Uber again delivered strong EBITDA, 13% above Street on platform scale and improved take-rate, guiding 4Q EBITDA 8% above Street,” the analysts said.
The broker noted that US driver supply has gone up 36% year over year, at 80% of peak 2019 levels, with churn down 20% versus "historical levels."
“We are very confident in Uber’s competitive position heading into 2023, as dual-use platform – mobility and delivery – creates advantages in a weakening macro environment,” the analysts said, adding this puts Uber ahead of competitors DoorDash and Lyft.
Oppenheimer said Uber’s third quarter bookings came in 2% below its estimates, and that trips and deliveries slowed to 19% year over year, versus 24% year over year in the second quarter.
Gross bookings grew 26% year over year to $29.1 billion, or 32% on a constant currency basis, with mobility gross bookings of $13.7 billion and delivery gross bookings of $13.7 billion. Trips during the quarter grew 19% year over year to 1.95 billion, or approximately 21 million trips per day on average, according to Uber.
Delivery gross bookings in US and Canada were up 19% year over year, and the US and Canada cost per trip was down 25% since 1Q21.
Oppenheimer’s analysts said the Uber One subscription service operates in eight markets, with more launches expected in 4Q. The average hours driven increased by 16% year over year, with driver earnings up by 25% in the same period. Uber has 870,000 merchants using its service; up 11% year over year, plus a 10% increase in the number of customers receiving groceries via delivery.
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