Recent weakness offers 'attractive entry point ' to buy Uber says analyst

Investing.com - Uber Technologies Inc (NYSE:UBER)’s recent stock dip offers an attractive entry point for investors, according to a Jefferies analyst note. At a time when concerns over potential competition from autonomous vehicle (AV) technology have weighed on the stock, Jefferies note the near-term impact to Uber's core rideshare business is expected to be minimal.

"We believe recent weakness creates a more attractive entry point for UBER,” Jefferies analyst Brent Thill wrote in the note. “ the near-term impact to rideshare will be minimal and our view that robotaxi fleets are best off partnering w/ rideshare .”

Contrary to market concerns, Thill sees Uber “uniquely positioned” to benefit from robotaxis through partnerships with AV developers, where it can leverage its infrastructure, customer base, and operational expertise, increasing the utilization and efficiency of robotaxi fleets.

We also believe AV developers will ultimately choose to partner rather than pursue standalone fleets," the note added.

From a cost perspective, Jefferies estimates that standalone robotaxi fleets would face higher operating costs, $14.51 per ride, compared to fleets partnered with a rideshare platform like Uber, which could operate at $11.19 per ride.

The difference is largely due to lower utilization rates in standalone fleets, which must maintain larger inventories to meet peak demand. Standalone robotaxi operators, therefore, may struggle with pricing flexibility and could need to offer discounts to lure customers from established rideshare services.

Thill reiterated his "buy" rating on Uber stock, with a price target of $100