- Mark Mahaney of RBC Capital Markets reiterated that Uber is his top long stock pick for 2020 after the company reported solid quarterly results Thursday.
- Shares of Uber surged as much as 9% in early trading Friday.
- “We still see material upside potential from current levels,” Mahaney said in a Friday note.
- Watch Uber trade live on Markets Insider.
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Uber’s solid fourth-quarter results “strongly affirm” that call, Mark Mahaney of RBC Capital Markets wrote in a note Friday. With a price target of $US59, he’s one of the biggest Uber bulls on Wall Street.
On Thursday, the ridesharing company reported fourth-quarter 2019 results that beat analyst expectations, and also said it would reach profitability in 2020, a year earlier than it had previously forecast. Shares surged as much as 9% on Friday following the earnings beat.
This all bodes well for the stock going forward, according to RBC. “We still see material upside potential from current levels,” Mahaney said in the note. His price target implies that Uber could surge as much as 60% from where it traded at Thursday’s close.
Uber is Mahaney’s top long pick stock in 2020, he reiterated in the Friday note. Uber faces several very large market opportunities, Mahaney wrote, as it offers a compelling value proposition to riders, drivers, restaurants, and more.
Uber is already the global leader in ridesharing, a business where Mahaney writes that the “economics are proving out.” In addition, the company is on its way to becoming a leader in the food delivery sector with its booming Uber Eats business.
All in all, Uber’s valuation looks highly attractive, Mahaney wrote, adding “FANGU very much.”
Mahaney’s views are popular on Wall Street, where Uber has a consensus price target of $US48 and 31 “buy” ratings, 11 “hold” ratings, and zero “sell” ratings, according to Bloomberg data. The rosy outlook for the stock is after a rough 2019, when Uber shed as much as 34% after its May initial public offering.
Uber’s IPO struggled as investors grew increasingly hesitant to back unprofitable unicorns, and as the company reported staggering losses in its first few earnings reports as a public company. Things started to look better for Uber’s stock when the company announced a path to profitability and began to focus on the parts of its business driving profits, like Uber Eats.
Mahaney also said that Uber should continue to lead over Lyft, its closest rival in the ridesharing business.
“We believe Uber’s ridesharing business should trade at a premium multiple to LYFT, given its larger market share, international exposure, and business diversification,” he wrote in the note Friday.
Uber has gained 25% year-to-date through Thursday’s close.
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