Uber Technologies (UBER) is expected to report better-than-projected first-quarter earnings and bookings, with the company’s mobility business likely to be the “bright spot,” BofA Securities said Monday.
The ride hailing company is scheduled to report first-quarter results May 8. BofA projects earnings at $0.26 per share and gross bookings at $38.27 billion, topping Wall Street’s views for $0.22 and $37.96 billion, respectively. The brokerage expects revenue of $10.09 billion, which is said would match the Street’s estimates. BofA sees mobility bookings at $19.18 billion versus the Street’s $19.14 billion view. The firm said its outlook assumes 28% growth.
“We remain constructive on Uber as our top travel/transportation stock given bookings and (earnings before interest, taxes, depreciation, and amortization) growth well above peers,” BofA analysts Justin Post and Michael McGovern said in a note. “Data points for (first-quarter) mobility spend suggest accelerating trends, while restaurant may have decelerated, though Uber’s other verticals should drive above-industry trends.”
On Uber’s earnings call, its management will have a chance to address potential risk from autonomous vehicles given Tesla’s (TSLA) focus on a robotaxi, the analysts said. “In our view, Tesla’s focus is not so much on competing with Uber as it is unlocking use cases for Tesla customers that want better asset utilization from their vehicles,” BofA said.
Uber and Tesla could form a partnership in the long term to give the electric vehicle maker’s car owners the ability to put their unutilized vehicles onto Uber, as compared to only having them in a separate app that would potentially have less customer scale than Uber, the analysts said. “That said, additional announcements around (Tesla’s) robotaxis are likely to continue to act as a negative headline risk for Uber stock,” especially around Tesla’s Aug. 8 robotaxi event, according to the note.
Overall, the industry is likely “years away” from full autonomous vehicles becoming a viable and reliable solution for rides, the analysts said. In the long term, growing competition in the autonomous vehicle industry could be a positive for Uber, they wrote.
For its second quarter, Uber is likely to guide bookings in a range of $39.5 billion to $40.5 billion, suggesting 5% and 19% growth sequentially and annually, respectively. The company’s EBITDA is pegged at $1.42 billion to $1.50 billion. If the company’s first-quarter EBITDA “beats significantly,” there could be additional upside in the current quarter, according to the note.
“We think Uber remains one of the best large-cap growth stories in the sector,” the analyst said. BofA reiterated its buy rating and a $91 price objective on the Uber stock.