Uber is keeping investors in the dark about the rest of the year, and that could limit the stock, analyst says (UBER)
- Uber shares rose Friday after the ride-hailing company's first quarterly report as a public company topped Wall Street's expectations the evening prior.
- Analysts were quick to point out Uber did not offer a formal second-quarter or full-year outlook, though it did offer color on other metrics.
- The lack of guidance was "surprising and adds to transparency issues," one analyst said.
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Uber left out some key forecasts in its first-quarter earnings report, and that could limit the stock's rally, an equity analyst said Friday.
The company did not offer investors formal guidance into its second-quarter and full-year sales and earnings figures in its first public quarterly report as a public company. Shyam Patil, an analyst at Susquehanna, takes issue with that.
"1Q in-line but lack of forward guidance surprising and adds to transparency issues," Shyam Patil, an analyst at Susquehanna, wrote in a note.
While he views Uber as a "once in a generation company" with the potential to transform transportation and logistics, he sees "business complexity, lack of visibility into forward numbers, and a precarious competitive landscape" keeping the stock range-bound. Patil's $42 target implies just a 4% gain from current levels.
It's common for public companies to give forward guidance, so it's worth noting when such figures are excluded. It was not immediately clear why the company did not provide a forecast. Uber's smaller and recently public rival, Lyft, offered forward guidance in its first public quarterly report last month. Uber did not respond to Markets Insider's request for comment.
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Analysts found little else that surprised them in the results. Some of the figures, including the company's first-quarter loss, were already detailed in Uber's amended filing with the Securities and Exchange Commission prior to its May 10 initial public offering. Thursday's results were relatively in line with what the company, and Wall Street, were anticipating.
While Uber did not provide formal revenue or EBITDA guidance, the company did give color on other closely watched metrics, according to D.A. Davidson analyst Tom White. Uber said that sales and marketing expenses as a percentage of gross bookings and adjusted net revenue (ANR) are expected to decline in the second quarter.
Additionally, Uber noted that its core platform ANR as a percentage of gross bookings will rise next quarter due to "increased rationality in U.S. ridesharing competition and new Eats service & small basket fees launched at the end of 1Q."
"UBER delivered a solid 1Q'19, and although commentary on moderating competition (and robust Contribution Profit) in certain markets was constructive, we don't expect buyside estimates to rise meaningfully on the back of last night's print," White wrote. He cut his price target to $46 from $53 while maintaining his "neutral" rating.
Uber is trading higher by 2.34%, at $40.83 a share, on Friday, but is still down 9.2% from its $45 initial-public-offering price.
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