Is Uber stock a buy? (May, 2024)

Following the release of the company’s first quarter results, Roth MKM analyst Rohit Kulkarni has maintained his “Buy” rating on Uber (Uber Stock Quote, Chart, News, Analysts, Financials NYSE:UBER).

On May 8, Uber reported its Q1, 2024 results. The company posted Adjusted EBITDA of $1.4-billion on revenue of $10.1-billion, a topline that was up 15% year-over-year.

“Our results this quarter once again demonstrate our ability to deliver consistent, profitable growth at scale,” said CEO Dara Khosrowshahi. “More than 7 million people now choose to earn flexibly on Uber every month, with driver earnings of $16.6 billion continuing to grow faster than our topline.”

The analyst summarized the quarter.

“Uber reported mixed 1Q results with gross bookings slightly below high-end expectations while revenue and adj. EBITDA were ahead of consensus,” he wrote. “FX headwinds & equity investments added to below-the-line noise as Uber swung to a GAAP loss, ironic after being included in S&P 500. Yet, we believe potential for Uber to cross-sell and add new products to core segments and growing subscriptions and advertising remain underappreciated.

In a research update to clients May 10, Kulkarni maintained his “Buy” rating on UBER but lowered his price target on the stock from $91.00 to $89.00.

The analyst thinks UBER will post EPS of $0.82 per share on revenue of $43.4-billion in fiscal 2024. He expects those numbers will improve to EPS of $2.26 on a topline of $50.0-million in fiscal 2025.

“Uber’s shares were down as much as -10% on the day of earnings, and have recovered some of its losses since then,” the analyst noted. “As a quick downside scenario valuation support exercise: UBER generated $4.2bn in FCF during TTM, and will likely generate >$5.5bn in 2024 and >$7bn in 2025. A mid-$60s stock price implies 20x ’25E FCF, or a trough valuation on reasonable assumptions, in our opinion.”