Uber Looking Good Ahead of Report

Uber Technologies Inc. (UBER) reports Q1 2021 earnings next week, with analysts looking for a loss of $0.37 per-share on $3.26 billion in revenue. If met, loss-per-share will be one-fifth of the loss posted in the same quarter in 2020, when lockdowns brought the ride share business to a grinding halt.  The stock fell nearly 4% in February after posting a large Q4 loss and missing revenue estimates and has drifted sideways in a triangle pattern since that time.

Post-Pandemic Ride Share

Optimism is growing that ride share will return to pre-pandemic levels in coming months, at least in the United States, complementing Uber’s rapidly growing footprint in delivery and other transportation services. Key acquisitions in grocery and alcohol delivery should add to revenue, helping the company achieve its first quarterly profit by the end of the year. Slow vaccine uptake in Europe remains the wild card, potentially hurting the bull case.

Needham analyst Bernie McTernan posted a ‘Buy’ rating and $77 target on Tuesday, noting “We see the potential for the move up the adoption curve in delivery during the pandemic to be sticky and look for Uber to benefit from its expansion into other verticals like grocery and alcohol, where recent acquisitions should help drive share quickly. With mobility returning to 2019 levels as the economy reopens, we like how the market appears focused on profitable US growth”.

Wall Street and Technical Outlook

Wall Street consensus has lifted to a ‘Buy’ rating in 2021, based upon 32 ‘Buy’, 2 ‘Overweight’, and 5 ‘Hold’ recommendations. One analyst still recommends that shareholders close positions and move to the sidelines. Price targets currently range from a low of $30 to a Street-high $82 while the stock is set to open Tuesday’s session more than $15 below the median $74 target. A smaller-than expected loss could provoke a buy-the-news reaction, given this humble placement.

Uber came public in the 40s in May 2019 and sold off to an all-time low in March 2020. A two-legged bounce reached 2019 resistance in November, yielding a breakout and rally to an all-time high at 64.05 in February 2021. Price action since that time has carved a symmetrical triangle on top of new support, with a rally above 61.50 setting off buy signals while a decline through 54.50 favors even lower prices. At this point, the smart money is betting on higher prices.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.