Uber Technologies (UBER) is evolving into a "diversified everything app" from predominantly a ride-hailing service, with growing margins, Tigress Financial Partners said Friday.
The company has expanded its network of ride-hailing and delivery services, ventured into "platform adjacencies" that offer high margins, and pursued capital-light partnerships with autonomous and electric vehicle manufacturers, Tigress Director of Research Ivan Feinseth said in a note to clients.
The brokerage noted Uber's partnerships and collaborations with major players such as Nvidia (NVDA), Alphabet's (GOOG, GOOGL) Waymo, Mobileye Global (MBLY), Rivian Automotive, (RIVN), Lucid Group (LCID) and Expedia Group (EXPE).
"Uber is turning its scaled mobility and delivery networks, high-margin platform adjacencies, combined with its capital-light, (artificial intelligence-driven) AV/EV and travel partnerships, into a diversified everything app with expanding margins and long-term compounding potential," Feinseth said.
Last month, Uber issued a bookings growth outlook that surpassed Wall Street's estimates, while its first-quarter profit grew year over year.
"Uber's pivot from subsidized growth to disciplined, self-funded expansion has driven (earnings before interest, taxes, depreciation, amortization, and restructuring) and free cash flow growth ahead of revenue, inflecting (return on capital) from negative levels in 2021 to meaningfully above its cost of capital, and positioning it for compound economic profit through continued reinvestment, share repurchases, and selective (mergers and acquisitions)," Feinseth said Friday.
Tigress raised its price target on the Uber stock to $115 from $110 while reiterating its buy rating.
"We believe further upside in the shares exists, and our 12-month target price of $115 represents a potential return of close to 65% from current levels," Feinseth wrote.
The company's shares were down 2% in Friday afternoon trade. So far this year, the stock has lost nearly 17% in value.
Price: $68.15, Change: $-1.40, Percent Change: -2.01%