Uber is more protected against inflation than its rivals

Uber Technologies Inc (NYSE: UBER) is a stock that’s more protected against inflation than its rivals, says a senior expert at Morgan Stanley. Shares of the San Francisco-headquartered company are down more than 30% for the year.

Brian Nowak is bullish on Uber’s ‘rides’ business

Brian Nowak drives his confidence in Uber particularly from its “rides” business that he sees as less elastic than its “eats” business. Speaking with CNBC’s Jon Fortt this afternoon, he said:

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Between reopening of the world, people going back out, travelling, coming back to work, even at smaller percentages than before, I think the rides business can really snap back much more than appreciated.

Last month, Uber Technologies said trips had recovered to about 90% of 2019 levels as it raised its Q1 EBITDA guide. Wall Street has an average price target of $58.63 on the stock at present that represents a little under 100% upside from here.

Why else does he like Uber Technologies Inc

The NYSE-listed company is scheduled to report its financial results for the first quarter on Wednesday. Making his case further for the Uber stock on CNBC’s “TechCheck”, Nowak added:

The unit economics in the rides business is quite strong. So, we think the ridesharing industry is a piece that the market is not giving Uber credit for, when we think about the free cash flow that can be generated over the next couple of years.

Consensus is for the $59 billion company to report 28 cents of per-share loss in Q1 on a 112.7% annualised growth in revenue. Last month, Neuberger’s Jason Tauber said Uber 2024 target for adjusted EBITDA will prove very conservative.