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Uber Rides Bookings Will Grow Faster Than Expected, Says Morgan Stanley

A Morgan Stanley analyst increases his share price target for Uber to $58 from $55.
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Rides bookings at Uber Technologies (UBER) - Get Free Report  will grow faster than expected, a Morgan Stanley analyst said Friday, as he increased his share price target for the ride-sharing company's stock to $58 from $55.

Shares of the San Francisco-based company were off 1.5% to $40.32 in trading Friday.

Analyst Brian Nowak, who keeps an overweight rating on Uber, raised his Uber Rides bookings estimate by 2% and he now forecasts 18% year-over-year growth, which he noted was 3% ahead of Wall Street's consensus.

Nowak explained his reasons for the estimate increase in a note to clients, pointing to the strength of U.S. private rides, the lapping of pooling headwinds, an assumed 3% year-over-year increase in U.S. pricing and the recent integration of Careem, a vehicle-for-hire company based in Dubai, which Uber acquired for $3.1 billion.

Rides "has evolved into a two-player game of unequals sooner than expected," Nowak said. Uber's ride-sharing business makes up about 65% of Nowak's estimate of Uber's total enterprise value.

Nowak keeps an equal-weight rating on Uber rival Lyft (LYFT) - Get Free Report.

On Wednesday, Angelo Zino, a senior equity analyst at CFRA, upgraded Uber to strong buy from buy while keeping his price target at $48 a share.

Zino noted the company already has reached its goal of 45% target margin on 25% of its bookings.

"We have higher conviction about the trajectory of the ridesharing market through '21 and better visibility toward adjusted EBITDA profitability," Zino wrote.

While noting the unprofitability of Uber Eats, the CFRA analyst said he was encouraged by signs of "greater operational efficiencies," a decision to move out of unprofitable regions, and the potential for industry consolidation, among other factors.

Zino also sees bookings growth of 20% for Uber in both 2020 and 2021.