Don't Buy Uber Just Yet, Traders Say After UBS Names It Top Pick in Ride-Hailing

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Investors are betting on big returns for ride-hailing stocks in 2022.

UBS named Uber its top pick in the ride-hailing and food delivery space in a Wednesday note, calling the company a winning catch-up trade.

The stock jumped nearly 6% on Thursday following the upgrade. The firm also ranked Lyft as a secondary pick, initiating coverage of the stock with a buy rating.

Uber has a "two-pronged approach" that makes it both a reopening and a stay-at-home trade, Joule Financial's chief investment officer, Quint Tatro, told CNBC's "Trading Nation" on Thursday.

"Their margins are going to increase as the ride-sharing movement comes back online," he said. "But the other side is that for those people that aren't comfortable, they have a huge deliveries segment that is doing exceptionally well."

Even so, now isn't the time to get in on the ride-hailing names, Tatro said.

Uber is down more than 30% year to date as the company continues to struggle with driver shortages. Rival Lyft has fallen over 20% in 2021.

"I think at this stage if you're looking to get back into these, you wait for a little pullback and then you add," he said.

 Uber looks oversold to Miller Tabak's Matt Maley, but he's also staying on the sidelines for now.

"It's been making a series of lower highs and lower lows since February," the firm's chief market strategist said in the same interview. "It's going to have to move above $45 by the end of the month to really show that it has changed its trend."

Uber shares fell nearly 7% on Friday to around $35.50 a share, hitting lows not seen since November 2020.

Disclosure: Tatro and Joule Financial own shares of Uber.


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