Evercore ISI Adds Uber (UBER) to Tactical Outperform List, Seen as 'One of the Least Riskiest Net Stocks'

October 15, 2021 7:30 AM EDT
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Evercore ISI analyst Mark Mahaney added Uber (NASDAQ: UBER) to the firm’s Tactical Outperform List with a six month outlook for the call.

Heading into the Q3 earnings season, Mahaney sees Uber as “one of the least riskiest Net stocks in terms of Street estimates.”

“While we expect Q3 earnings have been relatively “de-risked” given the company’s September update, where the company provided updated GMV and EBITDA guidance (now expecting to be EBITDA profitable as early as this quarter), we view Q4 as a potential “show me” quarter and with shares of UBER down 7% YTD (vs. LYFT up 3%, DASH up 49%, and NASDAQ up 15%), we think entry into the leading Rideshare company (in operating markets) and fastest growing Online Food Delivery company (ex-US and Canada) will provide meaningful upside through the end of 2021 and into 2022,” the analyst said in a client note.

The Uber stock rallied about 20% in the past few weeks on the updated guidance after shares hit a multi-month low in September. Although he acknowledges these gains, the valuation setup is still “very attractive.”

The Uber stock is currently trading in-line with LYFT (NASDAQ: LYFT) as far as multiples are concerned, and significantly cheaper than DoorDash (NYSE: DASH)

“Initially thought as a proverbial counterweight (Delivery) to its core Rideshare business actually trending in tandem with its Mobility recovery in many markets as Online Food Delivery becomes more habituated into everyday consumers’ lifestyles, we think the recent investments in the company’s subscription business and new vertical expansion will prove more resilient demand trends amid a full Mobility recovery, with the “profitability overhang” largely behind us resulting in significant share appreciation over the next six months.”

Key factors to consider are: 1) Mobility will be in the spotlight, but should generate pre-COVID levels of profitability, 2) Mobility recovery a question of IF, not WHEN, 3) With a built-out subscription business and new vertical contribution, Delivery should be more resilient amid a full reopening.

Shares of Uber are up over 1.2% in pre-open Friday.

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