As Uber Technologies Inc. gears up to release its earnings next week, KeyBanc Capital Markets analyst Justin Patterson has raised his outlook on the company's stock.

Patterson has upgraded the Uber shares (UBER, +2.84%) from sector-weight to overweight, stating that he expects the company's financials to continue improving. He is particularly optimistic about Uber's opportunities in the advertising sector.

According to Patterson, Uber is well-positioned to benefit from the growth of retail media through its emerging advertising business, which is expected to contribute to higher profit margins. Additionally, the advertising business provides more flexibility for Uber's ride-hailing operations, acting as a cushion that allows the company to maintain lower ride prices and increase overall volume.

Stable Margin Improvement Projected for Uber

Patterson foresees a stable margin improvement for Uber until 2024. He also believes that the stock's valuation has room to climb, citing Airbnb, which trades at a higher multiple of enterprise value to 2025 estimated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), despite slower growth rates for the alternative-accommodation platform.

Positive Market Reaction

Following Patterson's upgrade, Uber shares saw a 1.5% increase in morning trading on Friday. Investors eagerly await the company's earnings report, which is scheduled for Tuesday morning.

Patterson's Analysis of Lyft and Uber Shares

In a recent report, Patterson, an expert in the field, shares his thoughts on the current state of Lyft Inc. (LYFT) and Uber's shares.

Lyft's Performance and Concerns

While Patterson rates Lyft at sector-weight, he is less optimistic about the company's shares compared to Uber's. He acknowledges the need for more clarity regarding the impact of insurance on Lyft's financial model. Additionally, Patterson is looking for "signs of durable volume growth" from the company.

As Lyft typically goes through insurance renewals at the start of October, Management's update on the cost outlook could provide more insight. However, Patterson believes that near-term margin improvement for Lyft may remain limited, despite potential cost savings resulting from headcount reductions and a shift away from less profitable revenue streams.

Lyft and Uber Stock Comparison

Despite Patterson's concerns, Lyft experienced a 3.5% increase in share value on Friday morning, surpassing the gains of Uber's stock. It is important to note that while Uber's shares have risen by 92% this year, Lyft's stock has declined by 6%.


Patterson's analysis sheds light on the differing performance and outlook between Lyft and Uber. While Patterson remains cautious about Lyft's near-term margin improvement, it's worth following both companies closely to track any developments that may impact their future trajectory.

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