Uber positive catalysts priced in, Nomura cuts to hold

investing.com:

Uber (NYSE:UBER) was cut to Neutral from Buy at Nomura on Friday, with analysts increasing the price target on the stock to $62 from $59 per share in a note Friday.

The analysts believe the stock is fairly valued now, with most of its positive catalysts already priced in.

With Nomura noting the stock is up more than 155% in 2023, they believe investors have rewarded the company for profitably scaling its business model and, earlier this year, consolidating its market position in the ridesharing market in US/Canada. Meanwhile, they said its competitor Lyft struggled to capitalize on the post-pandemic recovery in ridesharing and slashed its workforce by a third.

«Most of the milestones and catalysts that we were anticipating to boost Uber’s stock value have been largely met,» said the analysts. «Uber management has indicated that it will return excess capital to shareholders as cash flow ramps, and that it will update investors on shareholder returns during the 4Q23 results announcement. In anticipation, the market (and us) are already penciling in share buybacks from 2024 onwards.»

The analysts also said growth stocks such as Uber benefited from falling interest rate expectations over the past couple of months, as the Federal Reserve signaled that it may start to cut rates from 2024.