Bank of America Raises Uber Price Target to $115 on Tax Benefits

Uber driver tax benefits and surging profits propel Bank of America’s optimistic $115 stock price forecast

Key Takeaways

• Bank of America raises Uber price target to $115 from $97 citing driver tax savings from the No Tax on Tips law and accelerated bookings growth of 140 basis points versus Q1.
• $1.0 billion in potential tax savings for U.S. drivers expected from the No Tax on Tips initiative, representing a 2.5% effective pay increase that could boost driver supply and Uber’s take rates.
• Uber stock surges 60% year-to-date while generating $2.25 billion in free cash flow and $1.87 billion in adjusted EBITDA, demonstrating the company’s transition to sustainable profitability.

Introduction

Bank of America has elevated its price target for Uber Technologies to $115 per share from $97, driven by multiple growth catalysts including federal tax relief for drivers and strengthening operational momentum. The upgrade reflects Uber’s transformation from a cash-burning startup to a profitable platform generating substantial free cash flow.

The revision centers on the No Tax on Tips legislation, which allows gig economy workers to deduct up to $25,000 in tip income from federal taxes. BofA analysts project this policy will deliver $1.0 billion in tax savings to Uber drivers annually, effectively increasing their take-home pay by 2.5% and potentially boosting driver supply.

Key Developments

BofA maintains its Buy rating on Uber while adjusting its valuation methodology to 24x 2026 free cash flow from 20x, reflecting broader multiple expansion in technology stocks. The firm positions Uber as a “top pick for 2025” based on accelerating business fundamentals.

The No Tax on Tips initiative directly impacts Uber’s 1099 contractor workforce, with BofA estimating U.S. drivers will generate approximately $42 billion in earnings this year. Of this total, $5.7 billion stems from tips, creating a meaningful tax benefit pool based on an average 18% tax rate.

Uber’s autonomous vehicle strategy gains momentum through its partnership with Moove, which secured $1.2 billion to fund AV initiatives in collaboration with Waymo. This development reinforces Uber’s multi-supplier approach to autonomous technology deployment.

Market Impact

Uber shares have surged 60% year-to-date, outperforming broader technology indices as investors reward the company’s shift to profitability. The stock trades near multi-year highs following consistent earnings beats and strong cash generation.

Bloomberg Second Measure data shows Uber’s bookings growth accelerated by approximately 140 basis points compared to the first quarter, with improvements across both Mobility and Delivery segments. This acceleration supports analyst confidence in sustained momentum.

The consensus among 54 brokerage firms rates Uber as “Outperform,” with analyst price targets ranging up to $120 per share. The average one-year target of $97.09 suggests continued upside potential from current levels.

Strategic Insights

Uber’s financial transformation reflects a broader industry shift toward profitable growth over expansion at any cost. The company’s Q1 2025 performance demonstrates this evolution, with adjusted EBITDA rising 35% to $1.87 billion and operating income reaching $1.2 billion.

The autonomous vehicle market represents Uber’s next growth frontier, with over 20 global partnerships providing diversified exposure to Level 4 technology development. This strategy positions Uber to benefit from AV adoption while maintaining operational flexibility.

Uber’s platform expansion strategy creates multiple revenue streams and enhances customer retention through its Uber One membership program. The company’s ability to cross-sell services across mobility and delivery segments strengthens its competitive moat.

Expert Opinions and Data

BofA analysts emphasize that federal tax savings from the No Tax on Tips law provide “a modest tailwind to supply” while potentially supporting take rates. The policy’s impact extends beyond immediate driver benefits to influence Uber’s unit economics.

According to Investing.com, the analysts highlight Uber’s partnership with Moove as crucial for fleet management, aligning with the company’s strategy of working with diverse long-term AV suppliers.

Uber’s recent quarterly results exceeded expectations with an average earnings surprise of 212.26% over the past four quarters. Full-year 2024 revenue reached $43.98 billion, up from $37.28 billion in 2023, while net income soared 422% to $9.86 billion.

The company projects Q2 2025 gross bookings between $45.75 billion and $47.25 billion, with adjusted earnings expected between $2.02 billion and $2.12 billion. These forecasts reflect management’s confidence in sustained growth momentum.

Conclusion

Uber’s evolution from a loss-making disruptor to a profitable technology platform exemplifies the maturation of the gig economy sector. The company’s strong cash generation, improving margins, and strategic positioning in autonomous vehicles create multiple value drivers for investors.

The combination of regulatory tailwinds, operational improvements, and technological advancement positions Uber to capitalize on long-term secular trends in mobility and delivery services. The company’s diversified revenue streams and strong balance sheet provide resilience against competitive and macroeconomic challenges.