Uber Technologies (NYSE:UBER) fell more than 2% on Thursday as investment firm Arete Research downgraded the ride-sharing company, citing worries over the “earnings quality” of it and its competitor, Lyft (NASDAQ:LYFT).

Analyst Richard Kumar lowered his rating on Uber (UBER) to neutral from buy, while also cutting the price target to $26, noting that the company’s growth rate in the last three quarters was boosted by one-off “business model changes,” something that does not appear to be in the cards for 2023.

“Uber’s delivery rivals already report declining orders, as they ‘focus on profits,'” Kumar wrote in a note to clients. “We struggled to see Uber having both growth and profitability in Delivery, while we think Mobility margins are overstated. Price hikes at both [companies] will test the limits of price elasticity.”

Lyft (LYFT) shares also fell 2.8% in mid-day trading on Thursday.

Kumar also noted that both Uber (UBER) and Lyft (LYFT) need operating leverage and accelerating growth to reach their respective targets and with incremental margin improvement seen as “unrealistic,” especially for Lyft (LYFT), it’s hard to see how the companies hit their respective targets.

In addition, Kumar noted that Uber’s (UBER) subscription bundle appears to be interesting to customers, but few are actually paying for it.

“If Uber was growing its base if paid subs, we would expect 12-month deferred revenue (classified as contract liabilities in Uber’s accounts) to rise, yet deferred revenue declined in [the third-quarter], despite launching new markets, suggesting Uber One isn’t adding many net new subs,” Kumar added.

The analyst also noted that the company’s delivery business, which has been described as a “pot of gold,” looks to be slowing as the COVID-19 pandemic slows down.

“With a ‘cost-of-living crisis’ from inflation in key markets, we see a risk that demand will be weak in the near-term, while supply seems to be reaching saturation (which is also a headwind for advertising demand),” Kumar added.

Earlier this month, Uber (UBER) and Lyft (LYFT) scored a key regulatory win as a New York court blocked a potential rate hike from New York City’s Taxi and Limousine Commission.

Analysts are mostly bullish on Uber (UBER). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a STRONG BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates UBER a HOLD.