Look for stock buybacks next, analyst says
Uber Technologies Inc. shares were getting a bump Monday as the company nabbed its highly anticipated inclusion into the S&P 500.
Wall Street analysts had been looking forward to the possibility for months that Uber UBER, +2.23% would get to join the index, and the company officially met the criteria for inclusion after its most recent earnings report. The milestone wasn’t necessarily a surprise, but it wasn’t a guarantee either, and analysts were cheering the news.
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“We believe that Uber will transition from ‘nice to own’ by investors to an ‘allocation consideration’ now that it is included in the S&P 500,” Ralph Schackart of William Blair said in a weekend note to clients. “Moreover, an addition to the S&P 500 can be a significant driver for a stock as it means that funds that passively track the S&P 500 will have to allocate funds toward Uber.”
He has an outperform rating on the stock.
Oppenheimer’s Jason Helfstein added that he expects Uber to “lean into growth and share buybacks, which should increase investor sentiment for growth/return in 2024.” He lifted his price target on Uber shares to $75 from $65.
Jefferies analyst John Colantuoni called the index inclusion “a positive catalyst that should more than offset concern” about a new minimum-wage rate requirement for delivery couriers. Colantuoni, who rates the stock a buy with a $65 target, noted that a state court rejected Uber and DoorDash Inc.’s appeal of that order Friday.
Uber’s stock was ahead 3.3% in afternoon trading Monday, to a recent $59.22, and on track for its highest close since April 16, 2021, when it finished at $60.35, according to Dow Jones Market Data. The stock is off 6.3% from its all-time closing high of $63.18 achieved Feb. 10, 2021.
Shares have gained 140% in the year to date, while the S&P 500 SPX, -0.54% has gained 19%.