Uber Poised for Bullish Initiations as Analyst Quiet Period Ends

(Bloomberg) -- Uber Technologies Inc. will probably be the focus of dozens of fresh research reports starting Tuesday after the quiet period ends for the 29 investment banks that underwrote its initial public offering last month.

After a rocky debut, followed by the ride-hailing giant’s first earnings report last week, there will be plenty to weigh in on. Analysts are likely to zero in on valuation, as well as prospects for revenue growth, spending and predictions on a path to profitability. Trading about 8% below its offer price, Uber is valued at roughly 5.08 times 2019 estimated sales, a slight discount to rival Lyft Inc.’s 5.38, according to data compiled by Bloomberg.

Uber is likely to be in for a number of bullish initiations, given the stock’s post-IPO decline and the fact that analysts who work for firms that help take a company public tend to be friendlier. The majority of analysts from banks that worked on Lyft’s IPO were bullish when they started coverage in April, preferring to look beyond the company’s lack of profits today in favor of long-term opportunities.

Uber’s first-quarter results garnered mixed reviews from the few analysts on Wall Street who published reports afterward. Wedbush took a bullish stance, saying the company bridged the gap between "near-term headwinds," such as shrinking revenue growth and heavy spending, to "the long-term vision." Susquehanna criticized Uber’s decision to forgo traditional forecasts and said its complex business and the intense competition it faces will probably combine to keep the shares range bound in the near-term.

Bearish investors have continued to increase bets against San Francisco-based Uber. Short interest as a percentage of the free float rose to 25% on Friday, the day after the earnings report, according to data from S3 Partners. That’s up from 22% a week ago.

Of the nine analysts tracked by Bloomberg who already cover Uber, five have buy ratings and four have neutral opinion. The average price target is $53, which implies 31% upside from Friday’s closing price.

The lead banks on the IPO were Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch. Other underwriters included Barclays, Citigroup, Allen & Co., RBC, SunTrust Robinson Humphrey, Deutsche Bank, Needham, Loop Capital Markets, Siebert Cisneros Shank, Academy Securities, BTIG, Cannacord Genuity, CastleOak Securities, Cowen, Evercore ISI, JMP Securities, Macquarie, Mischler Financial Group, Oppenheimer, Raymond James, William Blair, Williams Capital, HSBC, SMBC, Mizuho and TPG.

To contact the reporter on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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