'One of our favorite stocks in 2020': Uber reports earnings today after market close. Here's what 4 Wall Street analysts are talking about.

Carmen ReinickeFeb 6, 2020, 23:53 IST

Reuters/Andrew KellyUber IPO

Uber reports fiscal fourth-quarter 2019 earnings results after the close of trading Thursday.
Despite less-than-stellar stock performance since its May 2019 IPO, Wall Street is overwhelmingly bullish on Uber.
Here's what four Wall Street analysts are saying about Uber ahead of its earnings release.
Watch Uber trade live on Markets Insider.
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Uber, the ride-hailing company led by Dara Khosrowshahi, will report its fiscal fourth-quarter earnings after the close of trading on Thursday.

Wall Street analysts are overwhelmingly bullish on the company, despite its performance since its May initial public offering.

Although shares are still trading roughly 18% below Uber's $45 IPO price, the company has a consensus price target of $46.03, and 30 "buy" ratings, 12 "hold" ratings, and zero "sell" ratings from analysts that cover the equity, according to Bloomberg data.

Bearish investors were at first hesitant and critical of Uber as it had never turned a profit, putting it in a group of unprofitable unicorn IPOs that struggled in 2019 - at the end of the year, Uber had shed 34% of its value.

But in 2020, Uber's recovered some of its lost ground, most recently surging after offloading its Indian food-delivery business. So far this year, Uber shares have gained 24%.

Regardless of the bumpy start, the road ahead looks positive for Uber, according to Wall Street analysts who expect the company to continue to improve its bottom line and cut back on rider discounts on a path to profitability.

"Across its portfolio of businesses and assets, we see opportunities for market repair, long-tailed TAM and paths to unlock asset value," a team of UBS analysts led by Eric Sheridan wrote of Uber in a January 28 note initiating coverage of the company. UBS also expects Uber to continue growing its bookings rates and expand margins to reach its goal of being Ebitda profitable by 2021.

Here's what four other Wall Street analysts are saying about the company ahead of its earnings release:

Axel Springer, Insider Inc.'s parent company, is an investor in Uber.

See 'One of our favorite stocks in 2020': Uber reports earnings today after market close. Here's what 4 Wall Street analysts are talking about. >>

1. Wedbush: A company going through a "growth metamorphosis"

Price target: $50

Rating: Outperform

"Our analysis of Uber's growth dynamics, pricing rationalization in the ridesharing space, and Uber Eats strategy now lay the groundwork for a company going through a growth metamorphosis with a profitable business model now on the near-term horizon for 2021," Ygal Arounian of Wedbush wrote in a note Sunday.

"The biggest dark cloud on Uber's stock now remains the ongoing AB5 Legislation battle in California," Arounian wrote, noting that it represents an $8 to $10 overhang on the stock.

He continued: "While there will be much noise around this issue over the coming months, we ultimately believe based on our work that AB5 in its current form will not be enacted as the court battle/ruling will force a much more moderate/less draconian legislation to be enacted down the road (likely 2021.)"

Uber is also included in Wedbush's Best Ideas List.

2. Deutsche Bank: "Uber is better positioned than Lyft"

Price target: $50

Rating: Buy

"We see further room for Uber's shares to run," despite a strong 30% year to date gain, Lloyd Walmsley of Deutsche Bank wrote in a Wednesday note.

"We continue to think that the broader competitive trends globally across Uber's business generally speaking still trend in the right direction," he wrote, adding, "we think that Uber is better positioned than Lyft to weather short-term changes in any given market/ product."

3. JPMorgan: "Investor expectations have increased"

Price Target: $51

Rating: Overweight

"We think investor expectations have increased slightly, as evident in the recent stock movement," Doug Anmuth of JPMorgan wrote in a January 31 note initiating coverage of Uber.

JPMorgan expects strong growth from Uber, driven by its network of drivers, top positions in ridesharing and food delivery, and "faster-than-expected" rationalization of the US ridesharing and food delivery markets.

4. SunTrust Robinson Humphrey: "One of our favorite stocks in 2020"

Price Target: $56

Rating: Buy

"We expect in line-to-slightly better than expected" results, Youssef Squali of SunTrust Robinson Humphrey wrote in a note Tuesday.

"An easing competitive environment across NA and the divestiture of Eats India should power strong results and guidance for Uber relative to expectations. We continue to believe that SoftBank's funding strategy in certain markets is unsustainable, which should drive more rationalization in LATAM throughout the year."

"Uber remains one of our favorite stocks in 2020."

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'One of our favorite stocks in 2020': Uber reports earnings today after market close. Here's what 4 Wall Street analysts are talking about.

1. Wedbush: A company going through a "growth metamorphosis"

2. Deutsche Bank: "Uber is better positioned than Lyft"

3. JPMorgan: "Investor expectations have increased"

4. SunTrust Robinson Humphrey: "One of our favorite stocks in 2020"