Morgan Stanley Highlights Uber Inc. (UBER) and Lyft (LYFT) as Recovery Winners, PTs Raised
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Morgan Stanley analyst Brian Nowak reiterated an Overweight rating on Uber Inc. (NYSE: UBER) and Lyft (NASDAQ: LYFT) while raising the price targets to $75 and $65 from $70 and $60 as the recovery trade comes into focus.
The analyst stated "We continue to rely on rideshare usecase based modeling to gauge the slope of the recovery and remain bullish given: 1) An estimated ~60% of ’19 rideshare volumes came from a combination of social event/restaurants/bars and travel, 2) UBER/LYFT have both spoken to new users and use cases emerging during shelter-in (see here and here), and 3) UBER/LYFT's ~$1bn/$360mn of cost reductions in '20 are set to deliver flowthrough/free cash flow. We tie our travel forecasts to our rideshare models and model base case ’22 social/restaurant volumes to be 40%/45% higher than ’19. Despite modeling ’22 commute volumes to be 10% lower than ’19, UBER/LYFT '22 rides gross bookings still come in ~20%/25% above '19, due to recoveries in social and travel bookings. We remain significantly ahead of Street on
UBER/LYFT bookings and EBITDA, though prefer UBER due to more platform optionality and our view that UBER's multi product, global offering warrants a premium to LYFT's multiple (our ~6X UBER PT implied multiple is a ~30% premium to LYFT's ~4.7X PT implied multiple). We see ~40% upside to our UBER base case and ~80% upside to our bull case."
Shares of Uber Inc. closed at $52.85 yesterday.
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