Home Estate Planning Uber posts first annual net profit since IPO debut; equity analysts lift price target

Uber posts first annual net profit since IPO debut; equity analysts lift price target

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Uber Technologies, the renowned ride-sharing and food delivery giant, delivered impressive financial results for the holiday quarter, surpassing market expectations. The company forecasted quarterly core profit and gross bookings above estimates, reflecting a surge in demand for its services.  

In a notable achievement, Uber posted its first annual net profit since going public, indicating improved user retention and successful implementation of strategic initiatives like memberships, corporate travel offerings, and advertising campaigns, prompting several equity analysts to raise the price target. 

“We are increasing our Uber fair value estimate to $74 from $68. The firm continues to execute on all fronts, further strengthening its network effect moat source as displayed by fourth-quarter results that included growth in users, requests, frequency, user monetization, and suppliers,” said Ali Mogharabi, Senior Equity Analyst at Morningstar. 

Morgan Stanley also raised Uber’s price target to $82 from $62 with an ‘Overweight’ rating. 

The positive financial outlook sparked investor interest, with Uber’s shares rising approximately 1% during midday trading in New York on Wednesday. This uptick continues a remarkable trend that has seen Uber’s market value soar to nearly $150 billion over the past 12 months.  

However, its shares closed up 0.26% after the company delayed announcing its capital allocation plans until February 14th. It fell by 0.75% to $70.12 during after-hours trading. 

Uber reported a remarkable turnaround in its financial performance, with an operating profit of $1.1 billion in 2023 compared to a $1.8 billion loss in the previous year. The fourth-quarter operating income of $652 million comfortably exceeded analyst forecasts. Additionally, Uber reported a net profit of $1.9 billion for 2023, a substantial improvement from the $9.1 billion loss recorded in 2022. 

Looking ahead, Uber anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of $1.26 billion to $1.34 billion for the quarter ending March. This forecast, along with the gross bookings projection of $37 billion to $38.5 billion, exceeded analyst expectations. 

“We view 1Q24 earnings as the next major catalyst, as well as any updates on LT projections and/or any regulatory or legal proceedings related to their business lines. Any incremental guidance updates related to post-pandemic engagement trends are also likely to have a meaningful impact on shares,” noted John Blackledge, equity analyst at TD Cowen. 

“We forecast 11% annual revenue growth ’23-’33E driven by 14% Mobility revenue growth and 9% Delivery revenue growth over the period, and we expect EBITDA to rise from $4.1 billion in FY23 to ~$31.2 billion in ’33E.” 

Uber’s revenue for the October-December period surged by 15% to $9.9 billion, while gross bookings rose by 22% to $37.6 billion, surpassing Wall Street targets. The fourth-quarter net profit nearly tripled to $1.43 billion, driven in part by a $1 billion net pre-tax benefit resulting from the re-evaluation of the company’s equity investments. 

Revenue from Uber’s core ride-share business grew by 34%, propelled by robust trip growth in Latin America and the Asia Pacific region. Moreover, the delivery business witnessed a 6% revenue increase, marking the highest gross bookings growth in two years.

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