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UBER wins big price target raise at Roth

Uber Stock

Following the announcement of a significant share buyback, Roth MKM analyst Rohit Kulkarni has raised his price target on Uber Technologies (Uber Technologies Stock Quote, Chart, News, Analysts, Financials NYSE:UBER).

On February 14, before the company’s virtual investor day, Uber announced a share buyback of up to $7-billion.

“Today’s authorization of our first-ever share repurchase program is a vote of confidence in the company’s strong financial momentum,” said CFO Prashanth Mahendra-Rajah. “We will be thoughtful as it relates to the pace of our buyback, beginning with actions that partially offset stock-based compensation, and working towards a consistent reduction in share count.”

Kulkarni says the size of the buyback surprised the street.

“Uber’s shares were up +15% yesterday (vs. S&P 500 +1.0%) on surprisingly large buyback authorization announcement ($7bn) coupled with above consensus 3-year outlook for Gross Bookings, EBITDA, and FCF. Uber mgmt. laid out a compelling investment case for Uber to become a “must own” Internet/Tech asset among growth investors as its marketplace network effects have hit scale benefits resulting in serial compounding. Our 2024 estimates unchanged, however, 2025 estimates grind higher,” he wrote.

In a research update to clients February 15, Kulkarni maintained his “Buy” rating on UBER, but raised his price target on the stock from $79.00 to $91.00.

The analyst thinks UBER will post EPS of $1.31 on revenue of $43.1-billion in fiscal 2024. He expects those numbers will improve to EPS of $2.11 on a topline of $49.9-billion in fiscal 2025.

“Based on ’24x ’24E EBITDA. Our upside scenario math implies >$225bn in bookings, >$11bn in EBITDA, >$10bn in FCF vs. the Street at $207bn, $10.2bn, $9.5bn, respectively,” the analyst explained. “And, applying a 25.0x EV/FCF multiple or 4.0% FCF yield results in >$250bn market cap, or >$115 share price.”

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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