Uber Only Manages a Neutral as Susquehanna Sees Growth Slowing

(Bloomberg) -- Uber Technologies Inc. was initiated with a neutral and $42 price target by Susquehanna analyst Shyam Patil, who calls the ride sharing service a “once in a generation company” but slowing growth “creates uncertainty around [its] future trajectory.”

Susquehanna is concerned that growth has slowed “meaningfully over the past several quarters,” when bookings growth has slowed to the mid 30% year-over-year in the first quarter of 2019 versus high 50% growth in the first quarter of 2018. Patil adds that adjusted revenue growth has declined even more dramatically, falling to 14% from 85% over the same period.

"Law of large numbers have certainly impacted growth", Patil writes, adding that he is “still surprised by the recent trends given the sheer size of the addressable market.”

He says the "financial complexity, limited disclosures on KPIs [key performance indicators] for the core business and difficulty in finding comparables likely affect valuation." As a result, current valuation appears to capture most of the near- to intermediate term upside.

Uber now has 3 Wall Street firms rating it a buy, 4 at hold and none at sell, with the average price target at $55, according to data compiled by Bloomberg.

To contact the reporter on this story: Gregory Calderone in New York at gcalderone7@bloomberg.net

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

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