Uber Eats was a bright spot in the quarter, with revenue from the unit growing 53% year over year as consumers ordered more food to their homes during the coronavirus pandemic. Shares were rising 5.3% to $32.58 on Friday morning,
Previously in the week, Uber announced that it was laying off 3,700 employees, or 14% of its staff, primarily in recruiting and customer service positions.
Here's what Wall Street is saying about the ride hailing company's most recent quarter:
Deutsche Bank (Buy, $40 PT unchanged)
We continue to see Uber as a compelling stock both near term and longer term, as the food delivery business benefits from sharp pull-forward in secular trends, both businesses see improving unit economics and the rideshare business is starting to come back nicely in certain markets.
Lastly, we see competitive dynamics continuing to improve across both sides of its businesses and internationally, which should help the company on its trajectory towards consolidated profitability.
Oppenheimer (Outperform, PT raised from $34 to $38)
UBER is seeing meaningful gains in Eats, showing increased expense discipline around business lines/overall spending, and seeing a partial recovery in some markets. Moreover, the company's hybrid Rides/Food structure has allowed drivers to be re-purposed during COVID-19 and keep more users engaged (and using loyalty program), potentially reducing marketing and promotion spending post pandemic. Rides -80% globally in April, though seeing wk/wk growth globally the last three weeks, with US off the bottom.
DA Davidson (Upgraded from Neutral to Buy, PT raised from $23.50 to $39)
UBER posted a generally inline 1Q, and, although COVID-19 will pressure core Ridesharing over the next several quarters, we believe UBER is well-positioned to leverage its multi-product platform (Rides, Eats, and increasingly Grocery) to emerge post-pandemic in a significantly stronger competitive position. UBER is also getting leaner, with recent cost actions/market exits set to reduce annualized fixed costs by $1B and help ensure adj. EBITDA profits are delayed only slightly (to early 2021 in our view) despite COVID.
J.P.Morgan (Overweight, PT raised from $32 to $38)
Uber is the global leader in two secular growth industries, ridesharing and food delivery, and is leveraging its massive scale and technological expertise to rapidly launch and scale new products in 50+ countries. We expect Uber to emerge stronger post-Covid-19 given 1) Leadership position in rideshare in all its markets; 2) Eats to see accelerating growth as food delivery adoption increases; 3) Ability to expand into other big TAMs such as grocery and package delivery; 4) Focus on achieving profitability by 2021; & 5) Strong Balance Sheet with cash as of 1Q20 standing at $9B.
Wedbush ( Outperform, $38 PT unchanged)
"Uber is cutting significant costs (including 14% headcount cut) out of its business model with hopes to still hit profitability over the next year and adjust its cost structure for a harsh new reality that lies ahead for the next 3 to 6 months at least. To this point, right now the star of the show is Eats which is supporting trips and bookings and turned into a significantly more meaningful asset for Dara & team in a matter of a few months. But Uber is making tough decisions and while Eats is offsetting weak Rides demand, profitability remains a factor."