Uber's Earnings and 2020 Profits Promise: What Wall Street's Saying

Most analysts were encouraged by management's estimates that profits will come ahead of schedule, but some flagged disappointing ride-sharing gross bookings guidance as a concern.
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Uber  (UBER) - Get Report shares are in high gear as the company said on its earnings call it will reach profitability ahead of schedule by the end of 2020. Analysts were encouraged, but some took their price targets down a notch as ride-sharing gross bookings guidance marginally disappointed. 

Uber is RealMoney's Stock of the Day.

The stock was rising 7.55% to $38.89 a share on Friday morning. 

Loss per share for the December quarter came in at 64 cents on a GAAP basis, a narrower loss than Wall Street’s expected 67 cents. Adjusted EBITDA loss was $615 million, better than last year’s $817 million and narrower than the expected loss of $703 million. Revenue was $4.1 billion, slightly ahead of analyst’s expectations of $4.07 billion. Total gross bookings was $18.1 billion, beating estimates of $18.01 billion and growing 28% year-over-year.

Here's what Wall Street said:

Morgan Stanley, Overweight, Price Target Reduced From $57 to $55

"Fiscal Year 2020 Bookings (and Rides Bookings) guide lower than expected: Uber guided fiscal year 2020 gross bookings to $75 billion to $80 billion (versus us previously at roughly $82 billion)...with rides expected to grow less than 20% (vs previously at 20%). Uber's ability to deliver on this bookings/trips guide (at least) will be important to driving investor sentiment and the multiple investors will pay for Uber. The main driver of our $2 reduction in price target is our smaller long-term rides bookings assumption (which more than offset higher profitability)." 

- Brian Nowak

RBC Capital Markets, Outperform, Price Target Reduced From $64 to $59

"Tweaking estimates, $59PT: 2020 Bookings & Net Revenue chipped 4% to $79 billion and $16.8 billion, while EBITDA loss increased from $1.2 billion to $1.3 billion. Price target tweaked from $64 to $59 -- 4 times 2021 Revenue of $23 billion. A 25% plus 3-year Revenue compound annual growth rate with 55% plus Gross Margins support our target. Still our top internet 2020 long."

- Mark Mahaney

Deutsche Bank, Buy, Price Target Raised From $50 to $54

"We think headlines around food delivery consolidation and rationalization can provide a further catalyst for shares, particularly to the extent Uber is directly involved in any associated M&A. We increase our profitability estimates and now look for adjusted EBITDA of $664 million in 2021 (from $508 million previously) and see adjusted EBITDA and Free Cash Flow scaling to over $5.0B billion in 2025. We increase our 12-month target price to $54 (from $50), mainly due to raising our exit multiple in the discounted cash flow on increased confidence in the terminal state of the business." 

- Lloyd Walmsley

Goldman Sachs, Buy, Price Target Raised From $44 to $49

"We continue to believe the risk/reward in owning the leader in Mobility as the sector matures and steadily works towards profitability is favorable, particularly given the demonstrable resilience in consumer demand as the company raises prices and reduces incentives. In rides, the company expects a 25% take rate and 45% segment adj. EBITDA margin long-term. Management announced guidance for fiscal year 2020 gross bookings growth of plus 17% to 25% implying $75. billion to $80.0 billion in reported bookings (with about 150 basis points of foreign exchange headwind), versus FactSet consensus of $81.8 billion. Management noted that this guidance includes a modest impact from the acquisition of Careem, partially offset by the divestiture of the India Eats business.  Our 12-month price target goes to $49 from $44, now based on 4.5 times 2020 enterprise value-to-sales (versus 4 times prior on improved growth and profitability outlook), to reflect revised estimates." 

- Heath Terry

Oppenheimer, Outperform, Price Target Raised From $45 to $50

"Decreasing 2020/2021 gross bookings to 3%/4% as management targets more profitable opportunities, with corresponding 2020/2021E adjusted net revenue lowered 5%/7%, mostly on gross bookings deceleration. Increasing target to $50 from $45 and maintaining Outperform rating following better 4Q results with material Rides margin upside and a possible faster path to positive EBITDA. We estimate 200E/2021 Rides EBITDA plus 19%/30%, exiting 2021 at $4.4 billion, which supports our Sum-of-the-parts valuation at 18 times or 3.7 times adjusted net revenue."

- Jason Helfstein