On Wednesday, KeyBanc upgraded DoorDash Inc. (NASDAQ: NASDAQ:DASH) stock from Sector Weight to Overweight and set a new price target of $177.00. The firm cited increased comfort with consumer trends and the company's growth prospects in food and grocery delivery as the basis for the optimistic outlook.
DoorDash has seen a growing preference among consumers for its services. Recent surveys indicate that 39% of users favor DoorDash for food delivery, a substantial lead over competitors such as Uber (NYSE:UBER). Additionally, DoorDash has made inroads into the grocery delivery market, with 8% of users preferring its service, marking a 3 percentage point increase since December 2023.
The firm's positive stance is also supported by projections of robust growth in the coming years. KeyBanc's revised estimates suggest approximately 17% and 15% growth in Gross Order Volume (GOV) for the years 2025 and 2026, respectively.
These figures surpass the consensus estimates of 15% and 13% GOV growth. Moreover, expectations for EBITDA are set at $2.6 billion for 2025 and $3.5 billion for 2026, which are 3% and 6% above consensus, respectively.
KeyBanc's analysis includes the application of a forward-looking EV/EBITDA multiple, leading to the $177 price target. This target is based on a 20x multiple of the firm's projected 2026 EBITDA for DoorDash. The upgrade reflects KeyBanc's belief in DoorDash's strong core business and its potential to expand into new verticals successfully.
The upgrade and new price target represent a significant vote of confidence in DoorDash's strategy and market position, suggesting that the company is well-positioned to capitalize on the growing demand for delivery services.
In other recent news, DoorDash has been the subject of positive attention from multiple financial institutions. Raymond James initiated coverage on DoorDash with an Outperform rating, citing potential for 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.
DoorDash's robust growth in gross order value and expected improvements in EBITDA margins were noted by Cantor Fitzgerald, which initiated coverage with an Overweight rating and a price target of $160. BofA Securities also maintained a Buy rating on DoorDash, emphasizing the company's resilience to challenges in the restaurant industry and potential for increased margins.
These recent developments reflect analysts' confidence in DoorDash's market position, user growth, and strategic partnerships. However, these are analyst expectations and not guarantees of future performance.
InvestingPro Insights
Following KeyBanc's optimistic outlook on DoorDash Inc. (NASDAQ: DASH), current data from InvestingPro underlines the company's financial dynamics that may interest investors. With a substantial market capitalization of $58.1 billion, DoorDash is a major player in the delivery service industry. The company's strategy and market position are reflected in its remarkable revenue growth of 25.02% over the last twelve months as of Q2 2024, showcasing its expanding business operations.
An InvestingPro Tip highlights that DoorDash holds more cash than debt on its balance sheet, providing a cushion for operational flexibility and potential investments. Additionally, analysts anticipate net income growth this year, which could signal financial resilience and a positive trajectory for profitability. However, it is worth noting that the company's P/E ratio stands at a negative -140.07, indicating that it may be trading at a premium given its current lack of profitability.
Investors should also be aware that DoorDash's stock price has experienced significant growth with a 1-year price total return of 87.73% and is trading near its 52-week high, at 98.84% of that peak. This performance is consistent with a strong return over the last three months, as indicated by a 26.41% increase in price total return during that period. Those interested in deeper analysis will find additional InvestingPro Tips, with a total of 12 more tips available, which could further inform investment decisions regarding DoorDash.
For those considering an investment in DoorDash, it's recommended to review these insights and tips on InvestingPro for a comprehensive understanding of the company's financial health and market position.
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