Piper Sandler has updated its outlook on DoorDash Inc. (NASDAQ: NASDAQ:DASH), increasing the company's price target from $115.00 to $125, while maintaining a Neutral rating on the stock. The adjustment follows DoorDash's second-quarter results, which outperformed expectations in several key financial metrics.
The company reported results that were robust across all areas, with both gross order value (GOV) and revenue surpassing Wall Street estimates by approximately 3%. Moreover, DoorDash's EBITDA for the quarter was about 20% higher than Piper Sandler's projections.
The analyst noted the company's strong execution and highlighted the growth of new business ventures, pointing out that around 20% of DoorDash users are now ordering groceries through the platform.
Order frequency reached a record level and continues to be a focal point for the company's management team. Despite the positive outcomes from the recent quarter, Piper Sandler expressed a preference for another player in the food delivery sector, without specifying the competitor.
Meanwhile, Evercore ISI also raised its price target for DoorDash to $155, maintaining an Outperform rating and projecting a $2 billion free cash flow for fiscal year 2024. Also, Truist Securities kept a Buy rating and a steady price target of $145, anticipating robust growth in orders and average order value.
Deutsche Bank also maintained a positive stance with a $155 price target, expecting a favorable reaction to the upcoming second-quarter earnings report.
InvestingPro Insights
Piper Sandler's updated price target for DoorDash Inc. (NASDAQ: DASH) aligns with a broader financial picture that investors might find intriguing. According to InvestingPro data, DoorDash holds a market capitalization of approximately $44.24 billion and has shown a notable revenue growth of 27.24% over the last twelve months as of Q1 2024. Despite the company not being profitable in the last twelve months, analysts are optimistic, predicting DoorDash will turn a profit this year.
InvestingPro Tips suggest that DoorDash's balance sheet is in a healthy state, with cash reserves exceeding debt, and liquid assets surpassing short-term obligations. This financial stability is critical for the company as it navigates the competitive landscape of food delivery services. Additionally, while the stock price has been volatile, with a 3-month total return of -5.35%, it has still managed a positive year-to-date total return of 9.41% as of 2024.
For investors considering DoorDash as a potential addition to their portfolio, it's worth noting that the company is trading at a high revenue valuation multiple and a high Price/Book multiple of 6.32. While this may suggest a premium valuation, the company's growth trajectory and the absence of dividend payments, which indicates a reinvestment of earnings into growth initiatives, may justify the current market pricing. Those interested in further analysis can find additional InvestingPro Tips on DoorDash's financial outlook at Investing.com/pro/DASH.
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