Uber Technologies (UBER) topped Wall Street expectations on most measures when it reported its Q1 results earlier this week and the ride-hailing company is poised to to catch up and eventually surpass many of its peers over the next year and beyond, BofA Securities said Thursday in a research note.
Uber took a 6% hit during Wednesday trading after reporting an unexpected Q1 net loss, but the BoA analysts hardly mentioned the earnings miss, instead focusing on metrics like bookings, revenue and free cash flow growth. By those measures, the company was rolling along well, they said, writing Thursday Uber shares are now “attractively valued.”
BoA Securities also lowered its price target for Uber shares to $87 from $91 previously to reflect a small discount for the company to the so-called FANG stocks – Facebook (META); Amazon.com (AMZN); Netflix (NFLX) and Google (GOOG, GOOGL) – setting the pace for consumer-oriented internet companies. They also reiterated their buy rating for the stock.
The BofA analysts see some downside risks, with macro-economic forces potentially eroding ridership and revenue growth or competitors like Lyft (LYFT) and DoorDash (DASH) adding market share at Uber’s expense. New regulations, including higher minimum-wage levels, also could impact the bottom line for the company although they believe the likely upside outweigh those risks, they said.
Uber shares were nearly 3% higher Thursday afternoon.