On Thursday, Oppenheimer adjusted its outlook on DoorDash Inc. (NASDAQ: NASDAQ:DASH), raising the price target to $180 from the previous $165, while maintaining an Outperform rating on the stock. The firm's decision is based on a variety of factors including a robust delivery sector, as well as the company's performance in the marketplace, international expansion, and grocery segments, which are all contributing to stronger-than-expected order growth.
According to the analyst, DoorDash's recent results and guidance have met the significantly elevated expectations of investors. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) outperformed both Oppenheimer's and the Street's forecasts by 6% and 4% respectively, primarily driven by advertising revenue, lower regulatory costs, and increased operational efficiencies.
The analyst also highlighted the positive impact of DoorDash's grocery delivery services. The commentary suggests that existing users are more likely to opt for DoorDash for grocery deliveries compared to other grocery-focused platforms. This could indicate a competitive advantage for DoorDash in the grocery delivery space.
Furthermore, DoorDash has announced a new partnership with Lyft (NASDAQ:LYFT), which is expected to bolster the growth of its subscription service, DashPass. The collaboration will provide discounted Lyft rides and free upgrades to DashPass members, as well as offering Lyft members three free months of DashPass.
Looking ahead, Oppenheimer has increased its 2025 and 2026 Gross Order Value (GOV) estimates for DoorDash by 3% and 5%, respectively. However, the firm has conservatively assumed higher marketing and operational expenses for 2025, resulting in the EBITDA projection remaining largely unchanged, with a slight 2% increase for 2026. The new price target of $180 is based on a 20x multiple of the projected 2026 EBITDA, which represents a 23% premium over Airbnb, reflecting DoorDash's approximately three times faster growth rate.
In other recent news, DoorDash Inc. has reported substantial growth and operational efficiencies in its Q3 2024 results. The company demonstrated a 19% growth in Gross Order Value (GOV), driven by the success of both restaurant and grocery sectors. This growth has been further fueled by the acquisition of Tazz by Wolt, as part of DoorDash's targeted M&A strategy to expand its market share in Europe.
The company's international business is now gross profit positive, showing improved contribution margins similar to those in the U.S. Partnerships with Wegmans and plans to onboard larger grocers have strengthened the grocery delivery segment. New consumer cohorts, including first-time grocery customers, are showing a broader market appeal for DoorDash.
Furthermore, strategic partnerships with Lyft and streaming services are enhancing the DashPass membership program. The company's revenue growth has outpaced GOV growth, driven by advertising and efficient Dasher costs. DoorDash expects to maintain this trend of revenue growth outpacing GOV growth, focusing on maximizing overall profit dollars.
Despite these positive developments, DoorDash anticipates product enhancements to proceed at a slower pace than in previous years. However, the company remains committed to driving future growth through DashMart's national service and retailer partnerships. These are recent developments, reflecting DoorDash's continued commitment to growth and operational efficiency.
InvestingPro Insights
To complement Oppenheimer's bullish outlook on DoorDash, recent data from InvestingPro provides additional context for investors. DoorDash's market capitalization stands at an impressive $64.17 billion, reflecting the market's confidence in the company's growth trajectory. This aligns with the strong performance noted in the analyst's report.
InvestingPro Tips highlight that DoorDash's net income is expected to grow this year, and analysts anticipate sales growth in the current year. These projections support Oppenheimer's positive stance on the company's future prospects. Moreover, DoorDash's revenue growth of 25.02% over the last twelve months underscores its robust expansion, particularly in areas like grocery delivery and international markets as mentioned in the article.
It's worth noting that DoorDash has shown a remarkable 107.14% price total return over the past year, indicating strong investor confidence. This performance aligns with the company's operational improvements and strategic initiatives discussed in the article, such as the new partnership with Lyft and the growth of DashPass.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for DoorDash, providing a deeper understanding of the company's financial health and market position.
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