Why Uber Could Keep Climbing: Tax Breaks, AV Partnerships, Strong Bookings Fuel Analyst Optimism

BofA Securities analyst Justin Post raised Uber's price target from $97 to $115, maintaining a Buy rating and naming it a top pick for 2025. This upgrade is predicated on growing optimism regarding Uber's autonomous vehicle (AV) strategy, highlighted by global partnerships and Moove's $1.2 billion funding for AV fleet expansion. Additionally, a new 'No Tax on Tips' clause for gig workers is anticipated to increase driver supply by offering an estimated $1 billion in tax savings, thereby providing a modest tailwind to Uber's take rate, alongside sustained strong booking growth and Uber One subscriber traction. The analyst projects 2025 sales of $50.7 billion and EPS of $3.04.

Analysis

BofA Securities has upgraded its price target for Uber to $115 from $97, reiterating a Buy rating and designating it a top pick for 2025. This upgraded outlook is built on several key pillars, most notably an increasing conviction in Uber's autonomous vehicle (AV) strategy. This confidence is supported by over 20 global AV partnerships, a proven ability to scale services with partners like Waymo, and the recent $1.2 billion capital raise by Uber-backed AV fleet manager Moove, which reinforces the viability of a multi-supplier AV ecosystem. A second significant tailwind is potential U.S. tax legislation that would exempt tips from federal income tax for 1099 workers, which BofA estimates could generate approximately $1 billion in tax savings for drivers, effectively boosting their pay by 2.5%. This is expected to modestly increase driver supply and support Uber's take rate. This positive outlook is further underpinned by strong booking growth, subscriber lock-in from the Uber One program, and analyst projections of $50.7 billion in 2025 sales and $3.04 in EPS. The valuation is also seen as having room for expansion, as it remains at a discount to FANG-like peers on a GAAP earnings basis.

Key Decisions for Investors

• The combination of strong core business fundamentals, a tangible long-term growth catalyst in autonomous vehicles, and a potential legislative tailwind for driver supply supports a constructive outlook on the stock.
• Investors should monitor the progress of the 'No Tax on Tips' legislation and updates on Moove's AV fleet deployment, as these are key assumptions supporting the analyst's thesis for improved take rates and long-term growth.
• Given the valuation is still considered to be at a discount to large-cap tech peers on a GAAP earnings basis, investors might assess whether the market has fully priced in the potential for margin improvement and the strategic value of its AV partnerships.