Share prices of transportation and logistics giant Uber Technologies (UBER -2.39%) have tripled since the start of 2023 as the company pulled out of its pandemic-era downturn. Analysts at Jefferies see more gains ahead as Uber expands its portfolio of mobility products to attract new users and grow spending with existing customers.
Jefferies maintained its buy rating on Uber stock and boosted its price target from $95 to $100 on Friday. That new price target represents a potential upside of about 28% over the next 12 months or so from the current price.
An explosion of product offerings
Jefferies notes that Uber has gone from just two mobility products in 2011 to around 20 today. Beyond its standard service, Uber offers mobility solutions for stadiums, festivals, colleges, and businesses.
It's this continued expansion of services that Jefferies expects to drive mobility bookings and EBITDA over the next few years. Jefferies expects new products to drive additional annual growth of 4% to 6% for both of these metrics on top of growth driven by existing products.
A major comeback
Uber's core mobility segment suffered during the pandemic, but growth has now returned in a big way. Mobility bookings surged 29% year over year in the fourth quarter of 2023 to $19.3 billion, with mobility revenue surging 34% to $5.5 billion.
Uber is now solidly profitable and generating substantial free cash flow. Free cash flow totaled nearly $3.4 billion in 2023. That's eight times higher than in 2022.
Is Uber stock a buy?
While Uber's business is firing on all cylinders, it's important to understand that the company faces a key risk that could derail its growth. The company relies on treating its drivers like contractors, and any change that threatens the status quo could put a chill on the stock.
Uber stock is also pricey, trading for around 45 times free cash flow. While Jefferies may be right about quicker growth in the years ahead, Uber stock is no bargain.
