UBER TECHNOLOGIES INC (+) : Raising the Bid for Delivery Hero

Research evidence excerpt

UBER TECHNOLOGIES INC (+) : Raising the Bid for Delivery Hero

Refinitiv

Investment case, valuation and risks

Uber Technologies Inc (Outperform, Target Price USD108)

Investment case

We see Uber as being positioned to remain dominant for the next several years. First,

we view concerns around autonomous vehicles disintermediating the business long-

term as overdone and way too early. Second, its mobility offering continues to gain

share in the U.S. and internationally, building the necessary network density to maintain

the dominant position. Third, its delivery option and Uber One membership should

continue to drive increased multi-product adoption, providing runway for growth. And

fourth, Uber's consistent execution positions it to provide steady profit margin

expansion with significant free cash flow generation given its capital-light model. We

rate Uber at O-utperform.

Valuation methodology

We arrive at a target price of $108, based on an EV/2027E AEBITDA multiple of 16x,

largely in line with its 2-year average and a ~30% discount to its 2-year high.

Risks

To the upside:

Risks to the upside include 1) Multi-product adoption accelerates faster than anticipated,

resulting in better than expected gross bookings growth and outsized share gains across

both mobility and delivery, 2) Margins expand faster than expected on the back of better

than expected top-line growth and operational efficiencies, and 3), longer term, Uber

remains the key demand aggregator for AV businesses, resulting in better growth than

what is currently being baked into consensus today.

To the downside:

Risks to the downside include 1) Multi-product adoption slows and competition

intensifies across both mobility and delivery, resulting in weaker-than-expected top line