Even though investors are losing some confidence in the face of Covid headwinds, UberAnalysts believe that the company could be preparing for a return in 2022.

We believe this year will be different due to the outlook for adj. Needham analysts wrote in a Friday letter that EBITDA would be reduced and they will focus their efforts on finding grocery solutions despite mobility uncertainties. Although the firm selected rideshare stocks as its number one pick in 2022, it lowered its target price to $75 per share (from $77 per share).

Uber claimed that its fourth quarter adjusted EBITDA will be between $25 million and $75 million. It would then become its second quarter in profitability. CEO Dara Khosrowshahi told Bloomberg last monthHe anticipates that company’s performance will reach the upper end of the forecast.

Khosrowshahi stated that Post-Covid is an all-weather business and believes it can thrive in any environment. He also said that he was “confident” that the company would reach all-time heights by 2022.

Jefferies analysts also said Friday they see an accelerated path to profits from “reaping the benefits of hard work streamlining the portfolio in recent years + reaching scale in Mobility & Delivery.”

A few analysts have chosen rideshare stocks, with a drop of nearly 18% between 2021 and now, as their top picks in the New Year because of a number factors.

Deliveries will continue to grow

The company made substantial investments in its beverage, convenience and grocery delivery business segments since the beginning of the pandemic. The company acquired an alcohol delivery service Drizly last February. Uber was acquired in February after talks with GrubHub failed to secure food delivery company GrubHub. Postmates.

The company has managed to keep some business by focusing its acquisition efforts in its Eats section during the pandemic, despite the reduction of travel. Investors also believe that it will propel the stock forward. Needham is bullish about delivery and believes 2022 could be “the year of grocery.”

Analysts stated that they expect Uber to announce more partnerships in the future and expand their geographic reach in grocery delivery. They also consider these developments bullish.

Mobility is back

Analysts expect that mobility will improve over the next year.

RBC Capital Markets analyst said that UBER was not affected by Omicron headwinds and is therefore well positioned to take advantage of a more fuller, presumptive opening in 2022. It should also have strong exposure to both air and business travel. These run rates will be reflected in an inflection for Mobility’s segment level profitability.

Jefferies analyst said that Uber mobility bookings should fully recover between 2019 and 2022.

It also brings with it an increase in driver numbers. Uber’s struggle with demand and supply imbalances due to the pandemic has led to higher prices and extended wait times. Uber says that although figures are improving when it comes to recruiting and retaining drivers, they still have room for improvement.

It is possible that its recovery could still be affected by the new coronavirus strains and potential economic shut downs. In a Tuesday note, Wolfe Research analysts stated that a tight labor market can also hinder rideshare economics.

Investors are confident despite the fact that regulation is imminent

A key component of 2022 will be the regulatory environment.

RBC analysts stated Thursday, “Since the public was made, there has been a constant point of resistance to that regulatory overhang. Particularly around driver classification.” To ensure minimum wage and benefit, lawmakers advocate reclassifying gig workers to full-time employees. The companies can avoid costly benefits such as unemployment insurance by classifying drivers and other workers as contractors.

California’s Proposition 22 was approved by the majority of voters in 2020. This gave a temporary win to gig economy companies such as Uber. The ballot measure effectively exempted several gig-sponsor companies from Assembly Bill 5, a recently passed law that would have required them to be classified as full time employees.

However, it was a small win last yearCalifornia courts ruled Proposition 22 unconstitutional. It “limits the ability of a future Legislature” to classify app-based drivers under Workers’ Compensation law. This renders the whole ballot measure unenforceable.

The coalition of companies representing them said that it will appeal and investors seem to have ignored the announcement. Uber stock was closed that day.

California has inspired other states to follow its lead.

Mizuho analysts stated in a Friday report that they expect a positive regulatory solution for gig labor problems at the state level. “NY and MA will likely track similar to Proposition 22 (CA),” Mizuho analysts wrote. The State Assembly will vote on a bill in New York that would keep gig workers contractors, with support from two unions. With strong support from drivers, Massachusetts’s ballot measurement will be up for vote on Election Day.

—CNBC’s Michael Bloom contributed to this reprot.

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