Citizens lifts Uber rating on valuation and AV strategy

Investing.com -- Uber shares were upgraded to Market Outperform from Market Perform by Citizens analyst Andrew Boone in a note to clients this week, arguing that the company’s long-term autonomous vehicle strategy and valuation outweigh concerns about competitive pressure.

The call follows Uber’s fourth-quarter results, which Citizens noted modestly beat expectations, with bookings and EBITDA coming in “2% and 1% above consensus.”

Despite a slight EBITDA guidance miss for the first quarter, the firm said Uber’s outlook remains fundamentally intact.

Boone explained that the upgrade is driven by “better valuation,” even as concerns remain about future competition from Tesla.

The note cautioned that Tesla “will be the lowest cost provider amongst robotaxis” and could offer service “with costs significantly lower than that of a human driver” due to its integrated manufacturing and computing capabilities.

Citizens expects that competition “to be meaningful in the years to come.”

However, the firm cited Uber’s growing network of autonomous vehicle partners as a strategic advantage.

Boone wrote that Uber is “doing an exceptional job on building out a strong network of AV partners that it can aggregate in the medium term,” adding that while Uber may eventually need to buy AV technology, it has the capital to pursue acquisitions if necessary.

Citizens also expects autonomous vehicles to reduce ride-sharing costs and expand Uber’s total addressable market.

The firm set a $100 price target on the stock, saying valuation multiples could rise over time as AV partners demonstrate competitiveness with Waymo and Tesla.

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