Analyst Note| Ali Mogharabi |
While Uber Technologies posted mixed third-quarter results, we continue to be impressed with growth in the firm’s delivery segment and a gradual improvement in the mobility business. We are increasing our fair value estimate to $51 (from $48) as we have assumed stronger delivery revenue growth in 2021 and beyond, driven by long-term changes in consumer behavior toward more online food delivery and pickups. Additionally, we expect the firm to further accelerate partnerships with more restaurants, increasing the supply side of what appears to be a strengthening network effect. We lowered our projections for the firm’s mobility segment a bit as the recent surge in coronavirus cases in Europe and North America has created more uncertainty. While the stock has nearly tripled from March lows, we believe its current 21% upside (based on our fair value estimate) remains attractive.