Uber is set to prove its skeptics wrong over the next year, and shareholders will reap significant rewards, according to UBS. Analyst Lloyd Walmsley initiated coverage of Uber with a buy rating and named the stock a top pick, saying in a note to clients on Wednesday night "We think shares price in significant underperformance vs. Lyft and DoorDash in both Mobility and Delivery business. We think that as the company drives Mobility margins and continues to expand their Delivery business through share gains, new verticals and advertising, shares could re-rate in a rather large 'catch up trade,'" Walmsley wrote. UBS set a price target of $80 per share for Uber, which is more than 120% above where the stock closed Wednesday. The rally predicted by UBS would be a major turnaround for Uber's stock, which is down nearly 30% year to date. Shares rose 2.7% in premarket trading. One issue that Uber is facing in the current economic environment is attracting drivers at a time when employers of all sizes are reporting difficulty hiring. However, UBS said that investors were overrating that concern over the next year. "We think that Uber's Mobility margins can inflect more than investors appreciate, given the potential near-term concerns around take rates and driver incentives," the note said. -CNBC's Michael Bloom contributed to this report.
Uber posted a $5.9 billion loss in the first quarter of 2022.
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Uber is set to prove its skeptics wrong over the next year, and shareholders will reap significant rewards, according to UBS.