Uber Pegged a Best Idea With Higher Price Target at Wedbush

Wedbush analysts pegged Uber shares a best idea for investors, citing the ride-hailing company's opportunity to benefit from higher pricing.
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Uber Technologies (UBER) - Get Report shares rose after Wedbush Securities analysts placed the ride-sharing company on its Best Ideas List and raised their price target.

At last check Uber’s stock traded at $37.02, up 2%.

The San Francisco company's stock remains below its $45 initial-public-offering price from May. But it has rebounded 35% since it touched a 52-week low under $27 on Nov. 6.

Uber’s fundamentals are now on the upswing, Ygal Arounian and Daniel Ives wrote in a report. They lauded the company for growth, price increases in its ride-hailing service and the strength of its Uber Eats operation.

That creates “the groundwork for a company going through a growth metamorphosis, with a profitable business model now on the near-term horizon for 2021,” the analysts said.

“While it will take some time for the Street to get its arms around the growth and fundamental profile of Uber … and the ride-sharing market over the coming years, we believe this week will likely mark an important first step forward with better-than-expected fourth-quarter earnings and 2020 guidance,” the report says.

Uber is scheduled to release earnings Thursday.

To be sure, the company still faces court battles over California’s law to classify ride-share drivers as employees rather than independent contractors, the analysts said. Arounian and Ives call that matter “an $8-$10 overhang on the stock.”

In any case, they raised their price target for the stock to $50 from $45. Their rating is outperform.

Morningstar analyst Ali Mogharabi puts the stock’s fair value at $58.

“In light of Uber's network effect between riders and drivers, as well as its accumulation of valuable user data, ... the firm warrants a narrow moat rating,” he wrote in a report last year.