Urban Company gains for the sixth time in seven sessions after UBS initiates coverage with a Buy rating and the highest price target among analysts tracked by Bloomberg.
Urban Company shares rose as much as 8.2% to Rs 158.48 on Friday after UBS initiated coverage of the home-services platform with a Buy rating and a price target of Rs 180. The target is the highest among the price targets tracked by Bloomberg and implies about 16% upside from the stock's current level.
The stock has gained in six of the past seven sessions. Urban Company closed at Rs 155.47 in the previous session and has gained 50.9% over the past 12 months, according to Bloomberg data.
UBS expects Urban Company's revenue to grow at a compound annual growth rate of 32% between FY24 and FY29. The brokerage estimates the company's gross merchandise value will increase 2.9 times over the same period.
UBS said the company's monthly active users across its home-services platforms have grown consistently over the past four quarters. It also expects continued growth in service partners and transactions.
The brokerage estimates that Urban Company currently has about 6.8% of its addressable market in India. Based on its FY31 estimates, UBS expects penetration to remain below 5% of the total addressable market, leaving scope for further expansion.
UBS also pointed to competition in the online home-services market, including Snabbit and Pronto. These companies compete in areas such as cleaning, home repairs and beauty services.
Morgan Stanley, Kotak Securities Remain Positive
UBS' target comes after Morgan Stanley upgraded Urban Company on Aug. 3 with a price target of Rs 165. Kotak Securities retained its positive view on the same day with a Rs 150 target.
Goldman Sachs has a neutral rating with a Rs 135 target, while Ambit Capital has a Sell rating with a Rs 91 target. JM Financial has a Reduce rating with a Rs 135 target, while Motilal Oswal has a Neutral rating with a Rs 140 target.
Bloomberg data shows eight analyst estimates for Urban Company. Three analysts have Buy ratings, three have Hold ratings and two have Sell ratings. The consensus price target is Rs 143.88, implying a 7.5% downside from the stock's current price.
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