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Uber Technologies, Inc. (NYSE:UBER) saw its shares rise Monday as Citi upgraded its rating for the ride-hailing app firm to Buy from Hold, with an unchanged $45 price target, citing improved risk/reward for the stock.

In a note to clients, the US bank’s analysts pointed out that Uber stock has been impacted by overhangs like AB5, the California Assembly 5 Bill which limits the use of classifying workers as independent contractors rather than employees by companies in the state, and by its initial public offering (IPO) lock-up.

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They said, however: “Though these overhangs will likely persist, we believe Q3 results could swing sentiment more favorably, as H2 revenue is expected to accelerate and as high-level AB5 scenarios now appear better understood.”

The analysts pointed out that their new sum-of-the-parts (SoP) framework for Uber values its Rides business at around $31-$32 per share, implying that the stock currently ascribes no value for its Eats, Other Bets and minority holdings.

They also noted that the Rides valuation does not contemplate any benefits from future autonomous vehicle operations (AVs).

The analysts said: “Ultimately, we think the terminal value of the Rides business was always predicated on a different business construct than today’s, mainly an AV-network.  If anything, we think Uber’s relative AV position has improved this year.”

“Also potentially overlooked are the potential benefits from next-gen vehicles (EVs, ADAS platforms) that could further unlock the profit pool while offering opportunities to address current industry issues,” they concluded.

In early afternoon trade in New York, Uber shares were 2.2% higher at $30.34.

Contact the author at jon.hopkins@proactiveinvestors.com