Uber Wins Appeal To Restore UK Operating License; Street Stays Bullish

Uber has won a legal battle to regain its UK license, after a court ruled that the ride-hailing company is a fit and proper operator.

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“Despite their historical failings, I find them, now, to be a fit and proper person to hold a London operator’s licence,” Judge Tan Ikram said.

Uber (UBER) appealed against the decision taken in Nov. 2019 by the Transport for London (TfL) not to renew its London Private Hire Vehicle (PHV) operator’s license. The UK regulator had argued that the company was not fit and proper to hold a license due partly to regulatory breaches since June 2018 such as driver photo fraud and other “failings”. These also included drivers not being insured with appropriate cover, which created passenger risk. Uber was convicted of 2 offences of causing or permitting drivers to use their vehicles without insurance.

TfL said that some of the matters that triggered that decision have been addressed in the intervening 10 months. Uber argued that it has taken action and addressed the concerns raised. The ride-hailing company said that it has taken a number of steps to combat the use of fraudulent documents, including an increase in the number of ongoing assurance checks that are undertaken after document approval and an extension of its system to additional insurance providers.

Shares in Uber rose 3.2% to $35.56 on Monday, taking this year’s advance to 20%. Looking ahead, the $42.09 average analyst price target implies shares have room to appreciate another 18% in the coming 12 months.

Earlier this month, Wells Fargo analyst Brian Fitzgerald reiterated a Buy rating on the stock with a $48 price target, saying that the company’s capital position and variable cost structure will limit the risk of insolvency during an economic downcycle.

Fitzgerald noted that his price target is based on a 17.7x EV/EBITDA multiple on 2023 EBITDA of ~$3B, based on comparable company analysis.

The rest of the Street shares Fitzgerald’s bullish outlook. The Strong Buy analyst consensus boasts 23 Buys versus 3 Holds. (See Uber’s stock analysis on TipRanks).