Uber (UBER) was rising slightly in premarket trading Tuesday after analysts at Stifel initiated coverage of shares of the ride-sharing company with a hold rating though said it was bullish on the company's transportation and food delivery services.
Stifel also placed a $50 price target on the stock, a potential 13% upside from the stock's closing price Monday of $44.27.
While the firm liked Uber's main revenue sources, it said it Uber has a long road to profitability.
"The questions currently driving the Uber debates are the company's ability to achieve long-term growth targets and the path to profitability. In order to achieve our $36B adj. net revenue forecast by 2023, we expect Uber will need to have over 200mm monthly active platform customers spending over $700 annually. Expected competitive rationality to revisit our estimates and view on the shares," analyst Scott Devitt said.
Separately, the firm also raised its price target on Lyft (LYFT) shares to $76 from $70 following the stock's 14% decline from its initial public offering price of $72 a share.
Uber shares were rising 0.7% to $44.60 per share. Lyft shares were gaining 0.8% to $62.50.