Uber Stock Jumps After UBS Sees 54% Upside Potential

UBS initiated coverage with a buy rating and $56 price target

Uber Technologies, Inc. (UBER) shares rose nearly 2% during Tuesday's session after UBS initiated coverage of the stock with a Buy rating and a price target of $56 per share, which reflects a 54% premium to Monday's closing price. The move comes as Uber stock continues its turnaround since the beginning of the year, having risen from $29 to $38 per share.

Analyst Eric Sheridan believes that the ride-sharing company's global scale, secular growth tailwinds, underlying asset value, and management team focused on positive capital allocation provide a compelling risk-to-reward ratio at current levels. Sheridan sees an opportunity for "market repair" and "multiple roads" for the company to unlock asset value.

Earlier this month, Uber also secured licensing approval to operate in Vancouver, Canada, after eight years of lobbying efforts. The company's rival Lyft, Inc. (LYFT) has already received approval to operate in the city as well as the Whistler ski resort town.

Chart showing the share price performance of Uber Technologies, Inc. (UBER)

From a technical standpoint, the stock rebounded from a brief sell-off toward its reaction highs of around $38 per share. The relative strength index (RSI) remains in overbought territory with a reading of 71.40, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock could consolidate before resuming its trend higher over the coming sessions.

Traders should watch for a move higher to retest prior highs of nearly $38 if the bullish momentum is sustained. If the stock moves lower, traders should watch for a move toward trendline support at around $37.60 or the 50-day moving average on the daily chart at $31.04. The rising MACD suggests that traders should maintain a bullish bias on the stock over the intermediate term – especially given the analyst support.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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