2 Undervalued Growth Stocks to Buy Before They Surge 71% and 1,000%, According to Some Wall Street Analysts

THE S&P500 has gained 14% in 2024. The index’s strong start to the year means it has become increasingly difficult to find reasonably priced stocks. But some Wall Street analysts see Uber Technologies (NYSE: UBER) And Year (NASDAQ:ROKU) as undervalued.

• Brian Nowak at Morgan Stanley set a bullish price target that puts Uber at $120 per share by May 2025. That forecast implies a 71% upside from its current price of $70 per share.

• Ark Invest’s Nicholas Grous and Andrew Kim presented a valuation model that puts Roku at $605 per share by December 2026. This forecast implies a 1,000% upside from its current price of $55 per share.

Spoiler alert: Both price targets seem overly ambitious, but Uber and Roku are still worth considering. Here’s what investors should know.

Uber: 71% implicit increase by May 2025

Uber divides its business into three segments: (1) its mobility platform connects users to ride-sharing services and other transportation; (2) its delivery platform allows consumers to order food, groceries and alcohol from local restaurants and retailers; and (3) its freight platform connects shippers to carriers.

According to Times Of Update, Uber is the leader in carpooling in the United States, with 76% market share, and second in catering. food delivery (behind PorteDash), with a market share of 23%. The same pattern applies globally. Uber has an important role ditch not only through its size, which provides the company with a data advantage that continually improves its ability to dispatch and route drivers, but also through cross-platform synergies.

To elaborate, Uber uses cross-platform promotions to drive mobility users to the delivery app and to drive delivery users to the mobility app. Customer acquisition costs associated with cross-platform promotions are approximately 50% lower than other paid marketing channels, and Uber’s efforts are paying off. Reportedly, 31% of first-time delivery trips come from the mobility app, and 22% of first-time mobility trips come from the delivery app.

Uber reported strong first quarter financial results. Revenue rose 15% to $10.1 billion on strong booking growth in mobility and delivery services, offset by a decline in freight bookings. Some investors panicked because the company posted a generally accepted accounting principles (GAAP) loss of $654 million, much worse than its $157 million loss the year before. But that was due to a $721 million headwind from unrealized investment losses, not to mention that Uber was actually profitable.

Wall Street expects Uber to grow sales 14% annually through 2027, but that estimate leaves room for growth. The ride-hailing and online food delivery markets are expected to grow 16% and 19% annually, respectively, through 2030. Uber also has adjacent advertising opportunities with both platforms, a business segment that reached $900 million in annualized revenue in the fourth quarter. quarter.

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Uber currently trades at 3.8 times sales, a…