Uber Stock rises high due to buy

Shares of ride-sharing company Uber got positive news Monday as Citigroup analyst Itay Michaeli raised his rating on the stock from neutral to buy. At the same time he kept his price target unchanged at $45, which is roughly 50% above Monday’s closing price of $30.37 a share.

Uber shares have been beaten down since their IPO this past May, with shares falling over 30% from the IPO price as hype over the company faded, and investors became increasingly skeptical over ongoing losses at the company.

The second quarter saw Uber lose $4.27 a share, which was nearly double analysts expectations. The company has also said they expect heavy losses to continue through 2019 and into 2020 due to increased spending and expansion.

In his note to clients Michaeli said he believes the company’s third quarter financial report, which is due in mid-November, will show improving fundamentals. He also suggested that Uber Eats is worth far more than current models are showing, and thus the price of the division isn’t fully reflected in the current share price of Uber.

It is true that revenue growth for the ride sharing portion of Uber’s business slowed to 2% year-over-year in the second quarter, while Uber Eats saw growth of 72%. That indicates Uber Eats could be the driver of growth for Uber in the coming quarters.

It’s interesting to note that Uber was still the largest IPO of 2019, even if its shares are now suffering from investor wariness over a lack of profits that should have been present from the start.