Can Uber shares really become Deutsche Bank’s top pick for 2021?

• Deutsche Bank picks Uber as a top investment pick for 2021.
• Upgraded forecast fuels 3.4% daily surge for the Uber share price.
• Rideshare software could make Uber a global leader in travel.
• Want to trade Uber shares? Open an account today.

The expectation in the short-term is that continued COVID-19 restrictions could give investors a less than smooth ride. However, the investment bank sees a positive H2 on the horizon as vaccinations pave the way for a return to ridesharing. The Uber share price has rallied off the back of this assessment. After opening at $52.22 on January 4, shares took a sharp drop before climbing to $54.01 on January 5. That’s only marginally off the company’s highest ever share price of $54.86.

Uber shares spike after CEO looks to Amazon for inspiration

Fuelling the positive sentiment from Deutsche Bank is Uber’s commitment to becoming the ‘Amazon of transportation’. The comment from CEO Dara Khosrowshahi signals a change in direction for the company. After abandoning its self-driving vehicle hire project in late 2020, Uber sold its fledgling flying taxi service, Elevate, to Joby Aviation in December. The move away from creating hardware coincides with putting more resources into software development.

Khosrowshahi’s aim to become the global leader in mobility and delivery has prompted analysts to reconfigure their expectations. Deutsche Bank has subsequently upped its Uber share price target from $54 to $80, citing rideshare and improved profitability from deliveries as the primary reasons.

Post-COVID position could strengthen Uber

In essence, Uber is aiming to provide software that will underscore the post-COVID era in travel and delivery. As vaccine rollouts breakout around the world, hopes that life will return to normal in the second half of 2021 are growing. However, with every major economy suffering sharp declines over the last 12 months, businesses will have to adapt. This will be par for the course at Uber HQ.

The company was forged in the fires of the global financial crisis. Since 2009, it’s changed the way many people use taxis and, more recently, how food deliveries happen. In the wake of COVID-19, when the average consumer has less to spend, Uber has the experience and technology to make certain services cheaper. It’s already doing this in London. By tapping into open data sources, Uber Ferries is offering a more efficient water-bound taxi service.

Is a strong second half incoming?

It’s this ability to tweak, rather than completely disrupt industries, that’s prompted analysts to reconsider their positions on Uber shares. A major uncertainty in the current equation is vaccinations. However, as more people are given protection against COVID-19, Deutsche Bank sees a positive upside in H2.

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