Uber Technologies Inc. announced on Thursday that it has entered into an agreement to buy the British technology company Autocab in a move to expand its reach in the country.
The acquisition will provide Uber (UBER) with access to Autocab’s marketplace to connect Uber app users with local taxi operators in locations the ride-hailing company doesn’t operate. As a result, local taxi firms and drivers will be able to access hundreds of thousands of new additional trips every month, the company said. Financial terms of the deal weren’t disclosed.
Autocab provides private hire and taxi operators with technology to run their business, including booking and dispatch software, and also connects them with trips through their iGo marketplace.
“Autocab has worked successfully with taxi and private hire operators around the world for more than thirty years and Uber has a lot to learn from their experience,” said Uber’s Northern and Eastern European Manager Jamie Heywood. “We look forward to working with the Autocab team to help local operators grow and provide drivers with genuine earnings opportunities.”
Uber added that the company is also exploring channels to provide drivers with additional revenue opportunities related to its platform for other services, such as delivery.
Shares in Uber rose 3.6% to $34.40 on afternoon trading on Thursday, taking this year’s advance to 16%. Looking ahead, the $41.85 average analyst price target implies shares have room to appreciate another 21% in the coming 12 months.
Five-star analyst Lloyd Walmsley at Deutsche Bank this week cut the firm’s price target to $38 from $40 but maintained a Buy rating on the shares, saying that despite the “disappointing trajectory” of ride share improvement to-date for Uber, he remains positive on the recovery path, “particularly as the corporate world returns to work and new virus case loads start to moderate again”.
Walmsley believes that Uber will be able to take meaningful costs out of the business when a recovery happens, which is likely to lead to a “sharp improvement” to profitability.
The rest of the Street shares Walmsley’s bullish outlook. The Strong Buy analyst consensus boasts 26 Buys versus 4 Holds. (See Uber’s stock analysis on TipRanks).
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