Oppenheimer has increased the price target for DoorDash Inc. (NASDAQ:DASH) to $160 from $145 while maintaining an Outperform rating on the stock. This adjustment follows a survey of 1,451 respondents, which revealed a positive trend in consumer spending on restaurant and grocery delivery services.
The survey indicates that a significant portion of existing users, 64% for restaurant delivery and 70% for grocery delivery, are spending more now compared to six months ago. The findings suggest that there is a substantial opportunity to increase the frequency of orders among current users. Consequently, Oppenheimer has raised its Gross Transaction Value (GTV) and Gross Order Volume (GOV) estimates for DoorDash and UBER Delivery by 2% for the years 2025 and 2026.
Despite the current economic climate affecting cost-conscious consumers, the survey uncovered that 71% of non-users are not aware of potential savings through monthly subscriptions. This points to a considerable chance for DoorDash to attract new customers through enhanced marketing efforts.
The survey also highlighted challenges, such as lower penetration in grocery delivery compared to restaurant delivery, with 57% of respondents using grocery services versus 67% for restaurant delivery. A notable 73% prefer to shop for groceries in person. This preference may pose short-term obstacles for the grocery delivery sector, yet Oppenheimer sees potential in upcoming in-store initiatives as a significant long-term opportunity for advertising revenue.
The new price target of $160 is based on a multiple of 20 times the estimated 2026 EBITDA for DoorDash, discounted by 10%, which aligns with the target multiple for UBER. It represents a 37% premium over peers, including UBER, CHWY, ABNB, RVLV, FLUT, and CART. The premium is justified by DoorDash's expected EBITDA growth, which is projected to be 54% faster than its peers from 2024 to 2026.
DoorDash has seen significant attention from multiple financial firms. KeyBanc upgraded DoorDash from Sector Weight to Overweight, setting a new price target of $177, citing the company's growth prospects in food and grocery delivery. The firm's projections suggest robust growth in the coming years, with expectations for EBITDA set at $2.6 billion for 2025 and $3.5 billion for 2026. Raymond James initiated coverage on DoorDash with an Outperform rating, suggesting potential for profitability growth in the company's international and new market segments.
BTIG upgraded DoorDash shares from Neutral to Buy, setting a price target of $155, based on the company's near-term performance and under-appreciated longer-term growth drivers. Truist Securities maintained a Buy rating on DoorDash shares, highlighting the company's strong user growth and strategic partnerships.
InvestingPro Insights
With DoorDash Inc. (NASDAQ:DASH) showing a positive trend in consumer spending on delivery services, Oppenheimer's increased price target reflects the company's growth potential. In line with these findings, InvestingPro Tips highlight that DoorDash holds more cash than debt, indicating a strong balance sheet, and analysts predict the company will be profitable this year, signaling a positive outlook for investors.
InvestingPro Data further enriches the narrative with DoorDash's impressive revenue growth of 25.02% over the last twelve months as of Q2 2024, underlining the company's expanding market presence. Moreover, the stock's robust one-year price total return of 83.01% showcases the significant gains for shareholders, while the price hovering near 97.72% of its 52-week high suggests a strong market confidence in the stock.
For those seeking a deeper analysis, InvestingPro offers additional tips, including insights on stock volatility, valuation multiples, and liquidity measures, providing a comprehensive understanding of DoorDash's financial health and market position. Interested readers can find further exclusive InvestingPro Tips for DoorDash at https://www.investing.com/pro/DASH.
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