Throughout the pandemic, the number of individuals going to and from places decreased, and with it so did passengers using ride-hailing apps. Uber Technologies, Inc. (UBER) also saw its driver supply decline, and has since been attempting to attract drivers, in line with the reopening-induced increased demand. Meanwhile, Uber has recently hiked its average ride price, something consumers appear to have digested. (See Top Smart Score Stocks on TipRanks)
Providing his bullish hypothesis on the mobility and delivery company is Brad Erickson of RBC Capital Partners, who wrote that Uber’s price increases have actually resulted in passengers taking shorter trips, and thus drivers are able to increase their bookings per hour. The heavy demand for ride-hailing and delivery services was deemed by Erickson as an “efficiency gap” created by the company.
Erickson maintained a Buy rating on the stock, and provided a price target of $65. This target indicates a possible 12-month upside of 34.41% from the current valuation.
The five-star analyst was encouraged by the equalization of supply and demand for Uber, which gave him confidence in the company’s capacity, heading toward its Q3 earnings report in a few weeks. Meanwhile, he noted that the firm has been pulling away from competition in regard to pricing and average time spent per passenger to destination.
The food delivery space is occupied by several establish players, but Erickson prefers Uber over competitors like Grubhub (GRUB) and DoorDash (DASH).
Beyond its main business drivers, Erickson sees high potential for monetization in opportunities like “advertising, non-restaurant delivery and financial services remain options that have yet to be reflected in the stock.” Without these factors priced in, the current valuation is seen as discounted.
TipRanks website traffic tool shows that quarter-over-quarter thus far, visits to Uber.com have gained 3.15%, while the stock has fallen 10.61%. Furthermore, visits to the site have risen 17.54% year-over-year. UBER closed trading Friday at a price of $48.36 per share, and its next expected quarterly earnings report date is November 4, 2021.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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