Atlantic Starts Uber With Neutral Rating Despite Preferring Over Lyft

Atlantic Equities analyst James Cordwell initiated coverage of Uber (UBER) with a Neutral rating and $55 price target ahead of the company's initial public offering.

The analyst this morning also initiated coverage of Lyft (LYFT) with an Underweight rating and $50 price target.

Transportation-as-a-service addresses a large market opportunity says the analyst, whose analysis shows that scale enables superior returns and a clearer path to profitability. Given the benefits of scale, Cordwell prefers Uber to Lyft, due to the company's "market-leading ride-hailing position augmented by the fast-growing Eats business and freight brokerage opportunity."

The analyst's year-end 2019 price target of $55 for Uber implies 0.9 times fiscal 2020 gross bookings, which he notes is similar to the historical average multiple of Amazon's (AMZN) e-commerce business.