Uber Technologies, Inc. (UBER) shares opened sharply higher during Friday's session before giving up some ground by mid-day. The move came after Stifel upgraded the stock from Hold to Buy with a price target of $34.00 per share.
Analyst Scott Devitt believes that Uber is turning a corner, with signs of sustainable improvements in the fundamentals. He adds that the current valuation offers a more reasonable entry point for interested investors.
The move comes as the company continues to struggle with its London operations, where it employs about 45,000 drivers. In 2017, Transport for London said that Uber wasn't "fit and proper" to hold a license and took issue with software that blocked government attempts to catch lawbreaking drivers. The company risks losing its license in just days unless it renews.
Despite these concerns, Barclays analyst Ross Sandler said that Uber was one major announcement away from a positive narrative change heading into the new year. The analyst cited the 60% increase in price target for Delivery Hero when it sold its German food delivery operations to Takeaway.com in late 2018, saying that there's a similar path for Uber.
From a technical standpoint, the stock has rallied higher over the past month, but it remains well below its 52-week highs. The relative strength index (RSI) remains neutral with a 52.07 reading, but the moving average convergence divergence (MACD) experienced a bullish crossover. These indicators suggest that the stock could have room to run over the coming sessions.
Traders should watch for a breakout from the 50-day moving average at $30.45 over the coming sessions. If that occurs, traders could see a move toward reaction highs near $34.00. If the stock moves lower from resistance, traders could see a move to retest lows of around $25.50 before the stock regains momentum and makes another attempt higher.
The author holds no position in the stock(s) mentioned except through passively managed index funds.