10/7, 2:34 PM (Source: TeleTrader)
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Uber's rating boosted to buy at Citigroup

Investors in Uber Technologies Inc. may be in for a pleasant surprise when it reports results for the third quarter, Citigroup's Itay Michaeli wrote in a research note sent on Monday and upgraded the company to buy from neutral. The analyst left the price target at $45 per share compared to $29.67 where it ended last week. Shares rallied 3.44% in premarket trading.

The update due in mid-November is likely to reveal expansion in revenue growth and renew focus on the core, ride-hailing business, he claimed. The report highlights the factor of food delivery service Uber Eats with the suggestion that it is not properly reflected in the valuation. Michaeli acknowledged the regulatory hurdle in California and the stock lockup that came with the listing in New York but also asserted the two headwinds have become more easily measurable.

Revenue jumped 14% year on year to $3.17 billion in the fiscal second quarter against an increase of only 2% to $2.3 billion in ride hailing. Turnover surged 72% at Uber Eats to $595 million. The technology giant is valued at $50.44 billion. On October 2 it touched $28.31 per share, the lowest intraday level since entering the market on May 10. Uber lost 37% since its peak on June 28.

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