Uber Technologies extended recent gains on Wednesday as analysts continued to sound off on the company’s improved fiscal third-quarter guidance.
JPMorgan analyst Doug Anmuth wrote in a note Wednesday that the company’s (ticker: UBER) updated guidance for fiscal third-quarter adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, ranging from a loss of $25 million to a profit of $25 million was a positive surprise. He notes that the company expects positive adjusted Ebitda in July and August.
Anmuth, who has an Overweight rating and $72 price target, doesn’t think investors should read too much into an early fiscal fourth-quarter adjusted Ebitda outlook of between break-even and $100 million, since he thinks it likely reflects conservatism from management.
BofA Securities analyst Justin Post wrote Tuesday that hitting positive adjusted Ebitda on or ahead of schedule could ease investor concerns about the company’s business model. He has a Buy rating and $64 price objective, calling the stock oversold at recent levels.
The stock was up about 1.2% to $44.87, after rising more than 11% on Tuesday. Shares are still down 12% year-to-date, amid broader concerns about driver availability and incentives.
The disclosures on Tuesday, Post wrote, “suggest an increase in Active Drivers, up 5% in last two weeks, signaling a normalizing driver supply environment and improving Mobility profitability, with surge pricing also normalizing to lowest level since May.”
Morgan Stanley analyst Brian Nowak wrote Wednesday that the company expects rides, food delivery bookings, and profitability to improve in the fourth quarter, enabling Uber to lean into more incremental investments in things like last mile delivery and grocery delivery. He has an Overweight rating and a $72 price target.
“Uber’s rides business is likely to deliver more profitability than is currently appreciated,” Nowak wrote. “Fundamentally, rideshare is a highly cash-flow generative business that became even more cash flow generative through Uber’s [roughly $1 billion of cost cuts in fiscal 2020].”
Write to Connor Smith at [email protected]
