Here's why one analyst thinks Uber's stock could double

• Uber shares could double over the next year as it works toward profitability, according to a team of analysts at Barclays.
• The analysts said between the diminishing overhang from the stock's lock-up expiration and the potential for strong fourth-quarter results, investors could see outsize returns.
• Further, the firm added that if Uber consolidates its US restaurant delivery business with another company and scales back its operations in India, it could achieve profitability more quickly.
• Watch Uber trade live on Markets Insider.

After dipping well below its initial public offering price in recent months, Uber's stock could double over the next year, according to a group of Barclays analysts.

The firm, which has a $40 price target on Uber, says the stock could hit $54 if multiple forces align correctly. Shares traded at $26.74 as of 2:12 pm ET.

"We see the overhang around the lock-up expiration diminishing going forward, and 4Q19 results are likely to be more impressive than 3Q on the bottom line," the firm wrote in a note to clients on Friday.

The analysts added: "This cocktail should produce outsized returns for those willing to take the extreme risk."

Investors, bullish analysts, and the company are betting segments like Uber's restaurant delivery and freight platform will help drive sales growth and profitability in the future. The company posted more than $1 billion in losses for the third quarter.

Barclays also argued that if Uber were to combine its US restaurant delivery business with another company and scale back its operations in India, it would "meaningfully change the profitability outlook and the stock narrative."

According to the firm, about $1.2 billion of annualized Uber Eats losses come from India, while more than $450 million come from the US.

"Food delivery and ride-hailing in duopoly market structures can be very profitable, like travel, and we think Uber is one catalyst away from the market realizing it," the analysts said.

Shares of the ride-hailing giant have fallen more than 40% since the company's public-market debut in May.