US Markets
Monday, December 4th, 2023 7:27 pm EDT
Key Points
- Inclusion in S&P 500 Boosts Uber Stock: Uber’s stock experienced a more than 5% rise following the announcement by S&P Dow Jones Indices that the ride-hailing company has been selected to join the S&P 500. Although the official inclusion is set for December 18, such news often leads to increased stock value as investors anticipate its addition to portfolios managed by index funds tracking the S&P 500.
- Analyst Outlook and Price Target Increase: Analysts at Oppenheimer responded positively to Uber’s inclusion in the S&P 500 by reiterating their outperform rating on the stock. They not only reaffirmed confidence in Uber’s performance but also raised their price target from $65 to $75 per share. The analysts anticipate that this inclusion will have a favorable impact on investor sentiment concerning returns.
- Uber’s Financial Performance Meets S&P Criteria: To be included in the S&P 500, companies must meet specific criteria, including demonstrating positive earnings in the most recent quarter and over the prior four quarters combined. Uber satisfied these requirements, reporting a net income of $221 million on $9.29 billion in revenue for its third quarter. Over the past four quarters, Uber generated more than $1 billion in profit. Additionally, Uber’s market capitalization of approximately $118 billion comfortably exceeds the S&P’s criteria of an adjusted market cap of at least $14.5 billion for inclusion in the index.
Uber’s stock rose over 5% following the announcement by S&P Dow Jones Indices that the ride-hailing company has been selected to join the S&P 500. While the official inclusion is set for December 18, the stock typically experiences a boost as investors anticipate its addition to portfolios managed by index funds tracking the S&P 500. Uber is slated to replace Sealed Air Corp. in the S&P 500.
Analysts at Oppenheimer responded to the news by reiterating their outperform rating on Uber and raising their price target from $65 to $75 per share. They anticipate that Uber’s entry into the S&P 500 will have a positive impact on investor sentiment regarding returns. Following the inclusion, the analysts expect Uber to focus on growth initiatives and share buybacks, contributing to improved investor sentiment in 2024.
S&P’s rules mandate that index members must demonstrate positive earnings in the most recent quarter and over the prior four quarters combined. Uber met these criteria, reporting a net income of $221 million on $9.29 billion in revenue for the third quarter. Over the past four quarters, Uber generated more than $1 billion in profit. Additionally, Uber’s market capitalization of approximately $118 billion surpasses S&P’s requirement that companies must have an adjusted market cap of at least $14.5 billion to be included in the S&P 500.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/04/uber-shares-pop-as-company-is-slated-to-join-sp-500.html
