Uber shares could rise as much as 65% with profitability 'around the corner,' Jefferies says
Uberlanded a buy rating and an upside-scenario price target of $90 at Jefferies on Thursday.
- Uber could reach EBITDA profitability in the fourth quarter from its "much leaner structure."
- The ride-sharing company is among the "top reopening plays" at Jefferies.
Uber shares could rise by another 65%, with the upside scenario offered by Jefferies on Thursday as it initiated a buy rating on the ride-hailing platform and said the company looks set to soon turn a profit.
"Uber is among our top reopening plays. As vaccines roll out, Uber looks ideally positioned to accelerate growth and reach profitability on the back of two core engines," said Jefferies equity analysts Brett Thill and John Byun, adding that "profitability is around the corner."
The firm issued a $90 upside-scenario price target, which would mark a 65% rise from Wednesday's closing price of $54.51. The base-case price target of $75 implies a 38% increase from Wednesday's session. Shares of Uber during Thursday trade rose by as much as 4.6% to $57.
Jefferies foresees a 24% rise in bookings for the mobility portion of its business in fiscal 2021. Bookings slid by 46% in fiscal 2020, hurt by lockdowns stemming from the COVID-19 pandemic. Bookings should hit $57 billion in fiscal year 2023 and exceed the pre-pandemic level of $50 billion that was logged in fiscal 2019.
"The pace of recovery should follow that of reopenings, with leisure leading business
"While growth should decelerate in FY21, it should remain high," the firm said. "Ordering habits from
A "much leaner structure" at Uber sets up the company to reach EBITDA profitability in the fourth quarter, the firm added. Among its actions, Uber has exited several ride-hailing and delivery
Jefferies said downside risks to its scenarios include slower-than-expected penetration of ride-sharing and meal deliveries. Its price target in a downside scenario is $23, which would imply a 58% drop from Wednesday's close.
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