Uber Technologies, Inc (NYSE:UBER) clocked 105% revenue growth in Q2 to $8.1 billion, beating the consensus. Revenue from Mobility grew to $3.55 billion (+120% Y/Y), with Mobility Gross Bookings of $13.4 billion (+55% Y/Y).
Uber became a free cash flow generator in Q2.
JMP analyst Andrew Boone had a Market Outperform rating with a price target of $69. Boone acknowledged the Q2 beat was driven by Mobility, with mobility bookings and EBITDA exceeding consensus with earners at an all-time high, surge and wait times slowly normalizing.
Uber's pullback on marketing and incentive spending reflects Uber is operating in a rational market that can support higher profitability. Uber's global leadership position across Mobility and Delivery, improving Mobility trends, Uber's Delivery expanding use cases beyond food and unit economics justify the PT and valuation.
Mizuho analyst James Lee reiterated a Buy with a PT of $46, down from $58. He noted that EBITDA guidance came ahead of expectations due to Mobility strength and increased efficiency.
With macro uncertainties and rational competition, Uber leveraged its scale with cross-selling, lower consumer incentives, and higher network density, improving margins. Furthermore, driver supply growth exceeded volume growth, alleviating investor concerns about profitability and sustainability.
Lee maintained Uber as its top pick in travel with disciplined capital allocation and attractive valuation.
Morgan Stanley analyst Brian Nowak had an Overweight rating with a PT of $70, up from $68. He acknowledged stronger than expected EBITDA driven by rides and core operational efficiencies.
While slightly softer bookings reflected existing macro headwinds around the forward topline growth of Uber's two core businesses. Nowak also addressed Uber's multiple call options to drive more significant than expected EBITDA growth like rationalization of competitor promotional spending, compliance with worker classifications and rides advertising.
Needham analyst Bernie McTernan reiterated a Buy and its position on Needham's Conviction List with a PT of $52, up from $50.
Results provide him with increased confidence in UBER's ability to hit their '24 targets, which he sensed the market is skeptical of given current trading ranges. He saw a significant upside to shares if UBER can hit this guidance.
On a segment level, his Mobility estimates broadly go higher. Delivery bookings were soft outside the US, but his adjusted EBITDA estimates increased as management increasingly focused on profitable growth.
Raymond James analyst Aaron Kessler upgraded UBER to Outperform (from Market Perform) and established a $38 PT.
The upgrade reflected continued Mobility momentum, substantial EBITDA leverage from both the volume recovery and increasing operational efficiencies, and attractive valuation, with continued bookings strength and leverage likely to drive continued multiple improvements.
RBC Capital analyst Brad Erickson had an Outperform rating with a $46 PT. UBER reported its first FCF positive quarter and guided Q3 EBITDA ahead of Street, eliminating a vital piece of the bear thesis on the name.
Consistent with his driver supply analysis, he saw that wait times/incentives were coming down with drivers now at record levels. Erickson added that Mobility is outperforming, and the business mainly defies macro pressure concerns, particularly in Delivery.
Nitpicks remain in the form of the durability of pricing given high margins and underperforming volume along with the soft Delivery guide. He lifted the estimates slightly.
Price Action: UBER shares traded higher by 4.41% at $30.60 on the last check Wednesday.
