Uber (UBER) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Uber Technologies (UBER), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][4]. Brokerage Recommendations for Uber - Uber has an average brokerage recommendation (ABR) of 1.36, indicating a consensus between Strong Buy and Buy, based on recommendations from 47 brokerage firms [2]. - Out of the 47 recommendations, 37 are classified as Strong Buy, accounting for 78.7%, while 3 are classified as Buy, making up 6.4% of the total recommendations [2]. Limitations of Brokerage Recommendations - The article highlights that brokerage recommendations may not be reliable indicators of stock performance due to analysts' biases stemming from their firms' vested interests, leading to an overrepresentation of positive ratings [5][9]. - It is suggested that investors should not rely solely on ABR for investment decisions, as studies indicate limited success in using these recommendations to identify stocks with the highest price increase potential [4][6]. Zacks Rank as an Alternative - The Zacks Rank, which classifies stocks into five groups based on earnings estimate revisions, is presented as a more reliable indicator of near-term price performance compared to ABR [7][10]. - The Zacks Rank is updated more frequently and reflects the latest earnings estimates, making it a timely tool for predicting future price movements [11]. Current Earnings Estimates for Uber - The Zacks Consensus Estimate for Uber's earnings has increased by 5.5% over the past month to $2.54, indicating growing optimism among analysts regarding the company's earnings prospects [12]. - This increase in consensus estimates has contributed to Uber receiving a Zacks Rank of 2 (Buy), suggesting a positive outlook for the stock [13].