Company to buy back stock in an accelerated deal, while Wedbush has added it to its 'Best Ideas List'
Uber Technologies Inc.'s stock rose 2.7% on Monday, boosted by news the car-sharing company is planning an accelerated share buyback and that the stock has been added to Wedbush's "Best Ideas List."
The company said it would conduct a $1.5 billion share repurchase agreement with Bank of America, as part of the $7 billion program it announced previously.
"We are entering 2025 with considerable momentum and expect to continue scaling our free cash flows significantly, enabling us to return meaningful capital to shareholders while still investing in growth," Chief Financial Officer Prashanth Mahendra-Rajah said in prepared remarks.
The company deems the stock (UBER) to be undervalued as it's up just 12% in the last 12 months, underperforming the S&P 500 SPX, which has gained 26.5% in the same period. The stock has fallen 13% in the past three months, while the S&P 500 has gained 3.3%.
The deal is expected to be completed in the first quarter.
Separately, Wedbush analysts added the stock to their Best Ideas List, arguing the risk/reward is more attractive with the stock trading at about 12.8 times their 2026 adjusted Ebitda estimate.
"We view the dislocation as unwarranted for a company demonstrating strong fundamentals, with top-line growth in the midteens and adj. EBITDA set to grow over +30% Y/Y in each of the next two years," analysts wrote in a note to clients.
Uber's stock has come under pressure in recent months as results have largely caught up with expectations, limiting upside to near-term estimates. It has also been impacted by the ongoing uncertainty stemming from the impact of automated vehicles on its core business.
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"That said, we are encouraged by the recent expansion of key partnerships, which will be an important test of Uber's value proposition for AV providers more broadly in 2025," the analysts wrote.
Wedbush is expecting the near-term impact to Uber will be minimal, "given continued progress on growth initiatives, healthy performance in the core business, and the limited availability of AVs," they wrote.
-Ciara Linnane
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