One of this week's brighter lights on the stock exchange has been Uber Technologies (UBER 0.01%), which reported estimates-busting numbers before market open on Monday.
Despite that performance, one analyst reduced his price target on the ridesharing company after those figures hit the headlines. He still feels the company's shares are a buy, however, and he might just be correct.
Putting on the brakes
As the market was still digesting Uber's second-quarter release, KeyBanc's Justin Patterson made his adjustment. He reduced his price target on Uber stock by $10 per share to a new level of $80. As that reduced figure is still more than 23% above the company's latest closing price as I write this, Patterson maintained his overweight (buy, in other words) recommendation.
The prognosticator's continued bullish stance is based on the lack of headwinds Uber is facing at the moment, among other factors. He pointed out that the macroeconomic environment remains favorable, and the potential arrival of robotaxis doesn't pose a threat at the moment. Additionally, Patterson feels that the company has numerous means to grow its all-important gross bookings figure, even if the economy turns sour.
With these advantages, Uber should be able to grow its gross bookings by more than 16% annually by 2026, Patterson says. He predicts it'll also be able to generate around $8 billion in free cash flow.
NYSE: UBER
Key Data Points
The second quarter was quite a thrilling ride
Even Uber skeptics were impressed by the company's quarterly performance. Revenue rose by 16% year over year to $10.7 billion, on gross bookings that motored 19% higher. Net income more than doubled to slightly over $1 billion. Both topped the consensus analyst estimates.
Uber is chugging along quite nicely following the deprivations of the early days of the coronavirus pandemic, which saw people hole up in their homes instead of taking rides elsewhere. What has helped is management's effective diversification of the business; food delivery and freight hauling are helping to boost results. Ride sharing is now an indelible part of our transportation landscape, and Uber should continue to benefit handsomely from this. The stock indeed looks like it could be worth buying.
