Uber Analyst: Prop 22 Court Ruling A 'Sentiment Setback'

A California judge ruled Proposition 22, the state's gig worker law, as unconstitutional on Friday.

Although an appeal is imminent, the ruling is a “sentiment setback” both for the gig economy industry and Uber Technologies Inc (NYSE: UBER), according to BofA Securities.

The Uber Technologies Analyst: Justin Post maintained a Buy rating for Uber Technologies with a $64 price target. 

The Uber Technologies Takeaways: According to the LA Times, Uber could get a stay on the ruling soon, allowing time for consideration by the state court of appeals, Post said in the note.

“If the industry lost the appeal in lower courts, we think it would likely go to the California Supreme Court, a process that could take close to a year in total ... the outcome of any legal case, including any potential settlement or injunction, is inherently unpredictable,” he wrote further.

Many investors could feel optimistic about the appeal being successful.

“We also expect the rideshare industry to maintain business as usual throughout the appeal process in CA,” the analyst noted.

UBER Price Action: Shares of Uber Technologies were trading 2.58% higher at $40.96 at last check Monday.