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Will Uber and Postmates Announce Their Acquisition Deal Today?

Ambrish Shah - Author

Jul. 24 2020, Updated 1:11 p.m. ET

Uber Technologies (NYSE:UBER) has agreed to buy food-delivery service Postmates for $2.65 billion. The companies will likely announce the deal today. So far, the companies haven’t commented on the matter.

According to a Reuters report, “The deal has been approved by Uber’s board and could be announced as soon as Monday, Bloomberg reported, adding that Pierre-Dimitri Gore-Coty, head of Uber’s food delivery business, Uber Eats, is expected to continue to run the combined delivery business.” 

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The report also said, “Uber had plans to also acquire Grubhub Inc through its Uber Eats business, but walked away from the deal as Just Eat Takeaway.com NV eventually reached a $7.3 billion agreement last month to buy the U.S. online food delivery company.”

Uber stock rose 5.9% in pre-market trading at 6:30 AM ET today.

Uber’s growth projections

In the first quarter of 2020, Uber posted an adjusted EPS of -$0.64 compared to -$2.23 in the first quarter of 2019. The adjusted EPS beat analysts’ consensus estimate of -$0.88. The company generated sales of $3.54 billion—a growth of 14.3% from the same quarter a year ago. The ride-sharing company beat analysts’ consensus revenue expectation of $3.53 billion.

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Wall Street analysts expect Uber to post an adjusted EPS of -$0.85 on total revenue of $2.19 billion in the second quarter of 2020. Analysts also expect the company’s sales to decrease by 7.6% YoY (year-over-year) in 2020 to $13.07 billion. The sales could rise by 42.4% YoY in 2021 to $18.62 billion. The adjusted EPS would rise from -$6.81 in 2019 to -$3.59 in 2020. Analysts also expect an adjusted EPS of -$1.56 in 2021. 

Analysts’ target price and recommendations

Among the 38 analysts tracking Uber stock, 32 recommend a “buy,” five recommend a “hold,” and one recommends a “sell.” Analysts’ mean 12-month target price on the stock is $40.74, which implies a 32.8% gain from the current level of $30.68. The consensus 12-month target price for the stock has risen from $40.12 in June—a growth of 1.5%.

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Stock returns

Uber stock rose 0.8% on July 2 and ended the day at $30.68. At this closing price, the company’s market capitalization is $53.2 billion. The stock is trading 32.8% below its 52-week high of $45.63 and 123.8% higher than its 52-week low of $13.71. On a year-to-date basis, the stock has risen by 3.2% as of July 2.

Based on the closing price on July 2, Uber stock was trading 5.9% below its 20-day moving average of $32.62. The stock is also trading 5.6% below its 50-day moving average of $32.50 and 1.0% below its 100-day moving average of $31.00. Uber’s 14-day relative strength index score is 43, which suggests that it isn’t oversold or overbought. 

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Uber stock has an upper Bollinger Band level of $37.18, while its lower Bollinger Band level is $28.06. On July 2, the stock closed near its middle Bollinger Band level of $32.62, which suggests that it isn’t oversold or overbought.

On July 2, the Dow Jones Industrial Average rose by 92 points or 0.36%. The S&P 500 and the Nasdaq Composite rose 0.45% and 0.52%, respectively.

Read Why 2020 Looks Like a Bad Omen for Uber Stock and Uber Stock Surges 3% on Postmates Buyout Talks to learn more. 


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