On Friday, JMP Securities maintained a positive stance on Instacart (NASDAQ:CART), keeping a Market Outperform rating and a $42.00 price target for the company's stock. The firm anticipates that Instacart will surpass expectations and potentially raise its future earnings outlook as the company approaches its second-quarter earnings report, due on August 6, 2024.
Third-party data indicates that Instacart is experiencing robust customer engagement, which is likely to contribute to the company's performance. The introduction of EBT SNAP as a benefit in the second quarter is expected to serve as a supportive factor. Additionally, the increasing restaurant selection on Uber (NYSE:UBER)'s platform is seen as a positive for Instacart's app usage, potentially leading to higher gross transaction volume (GTV) and order numbers.
The analyst also pointed to Instacart's advertising revenue, which is believed to be catching up with the GTV's growth rebound. This alignment is anticipated to aid in delivering strong revenue results. Furthermore, cost management is expected to enable the company to translate top-line success into increased profitability.
Despite the intensifying competition in the digital grocery space, JMP Securities views Instacart's large scale as a competitive advantage. The firm also considers Instacart to be a key partner for grocers, which reinforces the sentiment that revenue visibility is on an improving trajectory with stabilizing customer cohorts.
In other recent news, Instacart has seen a flurry of activity with several major developments. The company has been the subject of analyst coverage, with Wolfe Research initiating a Peerperform rating due to growth concerns. KeyBanc Capital Markets also started coverage with a Sector Weight rating, acknowledging Instacart's strong position in the grocery delivery sector but noting potential challenges ahead.
Instacart has also been expanding its business operations. It launched a same-day delivery service in partnership with Sally Beauty (NYSE:SBH), a prominent hair color and care retailer, and expanded its partnership with Rite Aid (NYSE:US90274J5618=UBSS) to offer Electronic Benefits Transfer (EBT) card payments for the Supplemental Nutrition Assistance Program (SNAP) online.
Instacart also authorized a $500 million stock repurchase following the completion of a previous $1 billion program and launched a nationwide same-day delivery service in collaboration with The Home Depot (NYSE:HD).
Analysts from Loop Capital and BMO Capital Markets have raised Instacart's stock target, citing factors such as reduced share count, improved earnings estimates, and accelerated growth in Gross Merchandise Volume
These are the recent developments in Instacart's ongoing business activities.
InvestingPro Insights
As Instacart (NASDAQ:CART) gears up for its second-quarter earnings report, several metrics and InvestingPro Tips suggest a nuanced picture of the company's financial health. InvestingPro data highlights a robust gross profit margin of 74.44% for the last twelve months as of Q1 2024, indicative of the company's ability to maintain profitability on its sales. Moreover, the company's market capitalization stands at a solid $9.02 billion, reflecting investor confidence in its market position.
InvestingPro Tips point out that Instacart has been aggressively buying back shares and holds more cash than debt on its balance sheet, which could be seen as signs of strong financial management and a commitment to shareholder value. Additionally, the company's liquid assets exceed its short-term obligations, which underscores its financial stability. These factors may contribute to JMP Securities' positive outlook on the stock.
For investors seeking a deeper analysis, InvestingPro offers further insights, including additional tips on Instacart's financial performance and prospects. Readers can use the special coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to an expanded array of tips and data to inform their investment decisions. With 9 additional InvestingPro Tips available, investors can gain a comprehensive understanding of Instacart's strategic positioning ahead of its earnings report.
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