Uber's Wait Times and Pricing Bounce Demand Driven - Needham & Company

© Reuters. Uber's (UBER) Wait Times and Pricing Bounce Demand Driven - Needham & Company

By Sam Boughedda

Uber (NYSE:UBER) shares are trading over 2% higher Thursday after notes from analysts at Needham & Company, BTIG and Mizuho Securities.

Needham & Company's analyst who has a Buy rating and $52 price target on Uber, said that in their 13th Mobility Tracker, wait times and pricing bounced higher over the two weeks before Labor Day, up by 1,200bps and 300bps, respectively, compared to the prior 2-week period.

"We suspect this bounce is primarily demand driven, with continued improvement in OpenTable and TSA data supporting demand growth combined with potential late-summer seasonality impacting supply secondarily. As a result, we are increasing our estimates to the high end of guidance in 3Q22E for UBER (Buy, $52) and LYFT (Hold) on bookings/revenue and adj. EBITDA," wrote the analyst.

Meanwhile, a BTIG analyst who has a Buy rating and $43 price target on Uber explained that the firm's tracking highlights favorable trends for Uber's U.S. rideshare business with fares trending lower, rides close to break-even compared to 2019, and strong bookings growth this quarter.

He stated the "average fare has come down for six straight months, suggesting that ramping driver supply has allowed UBER to continue to dial back surge pricing," while quarter-to-date "ride volume is up over 60% and August was at -2% vs. 2019." In addition, that analyst explained that "average monthly booking volume is tracking up q/q and QTD bookings are +47% y/y."

Finally, an analyst at Mizuho Securities has a Buy rating and a $46 price target on Uber. He told investors his firm believes "Street EBITDA expectations appear conservative."

"We expect Uber to maximize margins while holding market share in 2H22, which is achievable due to rational competition and increased driver supply," wrote the analyst. "Consensus incremental EBITDA margins appear conservative for Mobility and Delivery. We estimate EBITDA upside of 7% for Mobility and 14% for Delivery in 2H22. On a consolidated basis, our analysis shows upside of 15% in 2H22 and 10% for FY22."