Despite a 76% increase in Uber Technologies Inc. shares (UER, +1.24%) this year, Barclays analyst Ross Sandler is confident that the dominant ride-hailing service can continue its upward trajectory. Sandler raised his price target for Uber stock to $57 from $45 on Friday and predicts that $70 is “becoming clearer.”
While Uber shares still trade below their IPO price of $45, Sandler points out that the company has yet to “break out” of its current range, even during peak market conditions. However, a number of catalysts are on the horizon, including widely anticipated inclusion in the S&P 500, potential buybacks, and growth in Uber’s base business, which should promote at least 15% growth in gross bookings in the years to come.
But Sandler is especially excited about Uber’s potential in grocery delivery, an area in which he believes investors have underestimated its value. While many have dismissed online grocery delivery as a path to nowhere after seeing the struggles of Amazon and other quick-commerce players, Sandler believes Uber could leverage growth in this area to further drive stock appreciation.
In addition to these catalysts, newer product initiatives like reserved rides and expansion into untapped international markets could also help spur growth. With all of these factors in play, Sandler is confident that Uber’s stock has plenty of room to grow and may soon break through its historical ranges.
Uber’s Potential Growth Areas
Uber is exploring new avenues for growth, including the potential expansion of its delivery services to encompass groceries. If the company is successful, the convenience factor and incentives for drivers could give this area a significant boost in the years to come, according to industry analyst Sandler.
Moreover, Uber One is another key area of interest, which offers users a subscription service that reduces the cost of customer acquisition. By incentivizing users to try different services across the Uber ecosystem, like food delivery, the program can help to increase engagement at minimal cost.
As for the future of Uber, Sandler notes that the company’s plans appear to point towards developing a “super app” that combines all of its services in one platform. Whether or not this is achievable remains to be seen, but Uber has shown a willingness to experiment with new ideas.
Uber’s Potential to Evolve into a Travel Concierge
Uber is testing consumer engagement by adding more layers of the travel stack to its app in various regions. According to Deutsche Bank analyst Lloyd Walmsley, this move could open up a big opportunity for Uber. With its CEO’s background and the market for new AI technologies, he sees a “reasonable possibility” that Uber could become a “travel concierge” utilizing artificial intelligence.
This concept has the potential to provide additional perks for Uber users such as premium upgrades to Black or Green (from X), discounted trips to/from the airport for booking other travel (hotel) through the app, and recommendations while traveling.
Walmsley believes that this newly implemented strategy is just getting off the ground, so it’s still too early to assign a lot of enterprise value to it. However, he does see potential for Uber’s stock to nearly double from growth and margin expansion in the base ride-hail and food delivery business alone, with this next stage being incremental to value. In fact, he titled his section on these prospects: “The Path To $100.”
As Uber continues to expand and improve upon their services, they have positioned themselves as a notable competitor in the industry. With their potential to become a travel concierge driven by AI, there is much more to look forward to from this ridesharing giant.