First, we have to take into consideration the market's overall bounce, with major U.S. indices rallying notably on Tuesday. Next though, the quiet period for analysts has lifted on Uber, allowing them to assign price targets and ratings on Uber stock.
Canaccord Genuity analysts assigned a buy rating and $55 price target. Deutsche Bank and Cowen analysts have a $58 price target, while Citigroup has a $45 target, in-line with the stock's IPO price. Barclays has a $50 price target, JMP Securities a $54 target, Morgan Stanley a $56 price target and RBC came in all the way at $62.
All of that seems like pretty good news. So why is Uber stock not moving even higher? It doesn't help that the IRS is parsing through its old tax filings. Specifically, it's looking at fiscal 2013 and 2014, causing some uncertainty in the stock.
Given all this news, no wonder it's Real Money's stock of the day.
Trading Uber Stock
There's all of this news on Tuesday and keep in mind that Uber stock is still digesting last week's earnings report. In its first post-earnings trading session, notice how it bounced between its 38.2% and 61.8% retracement levels, but ultimately closed below the eight-day moving average. It just needed a day, though. On Monday -- despite a decline in the overall markets -- Uber stock pressed through its eight-day moving average and channel resistance. It broke through but failed to close above its 38.2% retracement, as investors cautiously accumulate the name.
Tuesday's open gave bulls hope that perhaps the stock could retest its IPO price of $45 at some point in the near future.
So what now?
On the plus side, the stock is holding the backside of prior channel resistance and its eight-day moving average. But bulls need more; they need to see Uber stock north of $41.60 and preferably over Tuesday's high. A close over $41.60 will likely trigger a long entry for aggressive bulls. Cautious bulls may wait for a move over $42.50 to trigger an entry, with hopes of a rally to $45 and beyond.
However, a close below $40.50 would be concerning. It will put Uber below two key retracement levels, its eight-day moving average and threaten to take out its post-earnings close near $40.40. It will almost certainly bring $39.50 into the picture and possibly lower should that fail as support.
So can Uber stock rally more than 34% to $55, a rough average of analysts' new target? It can. But it needs to clear $42.50 first, then $45 to have a chance.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.