- KeyBanc cut Uber’s price target to $105 from $110 but kept an Overweight rating, citing autonomous-vehicle uncertainty and a 15.5x 2027 EV/EBITDA valuation.
- The firm modestly raised long-term bookings growth assumptions on strength in delivery, with food and grocery usage showing year-over-year gains despite softer rideshare loyalty versus Lyft.
- KeyBanc nudged forecasts by lifting 2026 EBITDA about 2% and trimming 2027 EBITDA about 2%, and added non-GAAP operating income and EPS metrics to its framework.
- Most analysts see AVs as a longer-dated overhang with limited impact through 2027, though some have downgraded Uber amid rising competitive uncertainty.
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Valuation Adjustment and Assumptions. KeyBanc’s reduction of Uber’s price target to US$105, from US$110, reflects its decision to apply a more conservative EV/EBITDA multiple of 15.5× on 2027 estimates, down from prior higher valuation multiples. This pricing reflects AV uncertainty as a primary justification. The adjustment aligns with sentiment shifting toward risk aversion in growth -tech stocks where long-term structural shifts (like AVs) complicate valuation tools.
Business Momentum and Growth Drivers. Despite cautious valuation, Uber’s fundamentals remain strong. KeyBanc sees rising usage and market share in its delivery segment (food and grocery), while mobility still plays a substantial role. Gross bookings, trips, and user base continue to show high-teens annual growth. Delivery usage rising to 41% for food and 22% for grocery signals solid vertical expansion even as rideshare loyalty (with respect to Uber vs Lyft) experiences mild erosion.
Financial Forecast Dynamics. Uber’s financial outlook is being nudged upward for 2026 EBITDA (+2%) but pulled back for 2027 (-2%), recognizing a benefit from delivery and scale but discounting long-term margins under AV-related risk. Also notable is KeyBanc’s inclusion of non-GAAP operating income and non-GAAP EPS to align with transparency demands from investors in light of elevated capital deployment.
Autonomous Vehicles: Overhang, Not yet Disruption. While AV risk looms large, the consensus among analysts such as Jefferies and Bank of America suggests near-term growth (through 2027) will not be materially disrupted. Risks include potential cost competition from Tesla, Waymo and others; regulatory delays; and Uber’s role likely to be as a platform/aggregator rather than AV owner. Canaccord has already moved to downgrade Uber, citing these AV threats and using valuation multiples discounted relative to peers.
Strategic Implications. From a strategic standpoint, Uber must balance investment in growth (delivery, expanding AV partnerships) with margin discipline. The narrowing of long-term EBITDA forecasts suggests increased focus on cost leverage, capex deliberation, and potentially reshaping guidance to appease investor concerns. Upside hinges on execution, AV developments, and ability to monetize its delivery expansion without heavy incremental costs.
Open Questions. Key unresolved issues include: how rapidly AV adoption (both regulatory and commercial) will scale; whether Uber’s partnerships with AV providers will yield enough value vs AV providers going direct to consumers; how competitive pressures in delivery (from incumbents and new entrants) will affect margins; and whether macro factors like regulatory changes, insurance costs, and driver costs compress profit margins.
Supporting Notes
- KeyBanc lowered Uber’s price target to US$105 from US$110, maintaining an Overweight rating, citing “a more conservative multiple amid AV uncertainty” and using 15.5× 2027 EV/EBITDA in its model.
- Uber’s delivery business saw food delivery usage increase to 41% (up 11 points YoY) and grocery delivery usage to 22% (up 3 points YoY); KeyBanc raised its bookings forecast by about 1.5% annually to reflect this strength.
- EBITDA forecasts adjusted: 2026 estimate increased ~2%, 2027 estimate decreased ~2% to reflect investment levels and margin pressures.
- Peer analysis: Jefferies estimates AV threat would have “nearly zero impact on growth through 2027” even under aggressive Waymo expansion; Canaccord downgraded Uber to Hold citing AV risk and discounted valuations relative to peers.
- Uber’s Q3 2025 results: Gross bookings up 21%, trips up 22%, revenue up 20%, adjusted EBITDA up 33% YoY; guidance for Q4 bookings $52.25-$53.75B, adjusted EBITDA $2.41-$2.51B.
- Sector comparables: Lyft’s current EV/EBITDA around 22× trailing twelve months; Uber in sector-valuation tables shows EV/EBITDA in lower-20s historically, reinforcing significance of KeyBanc’s shift to mid-teens multiple.