Truist Securities continues to show confidence in DoorDash Inc. (NASDAQ: NASDAQ:DASH) by maintaining a Buy rating and a price target of $145.00 as the firm anticipates a second-quarter report that aligns with expectations, showcasing robust growth in the number of orders and average order value (AOV).
These factors are projected to lead to industry-leading growth and profit margins for DoorDash, with a 17% year-over-year increase in Gross Order Value (GOV) and a 16% adjusted EBITDA margin, an analyst from Truist said on Friday.
The securities firm pointed out DoorDash's solid underlying fundamentals, which stand out in comparison to its competitors, with the company showing positive user growth.
Additionally, the company has seen record order frequency and improvements in unit economics that are expected to result in unprecedented profit margins.
Despite DoorDash's stock only increasing by 2% since the start of the year, Truist Securities remains optimistic about the company's prospects. The performance is set against Uber (NYSE:UBER)'s 7% increase and the S&P 500's 13% gain over the same period.
The firm's outlook is bolstered by the belief that the second half of 2024 will reveal the benefits of DoorDash's investments made in the first half of the year in international expansion and category diversification.
At the same time, Deutsche Bank has maintained a positive stance on the food delivery company, predicting a favorable reaction to the upcoming second-quarter earnings report. The bank expects a slight slowdown in third-quarter Gross Order Value but anticipates this will boost investor sentiment. Deutsche Bank also forecasts improvements in unit economics and diminishing mix headwinds, which are expected to enhance reported Gross Margins.
Meanwhile, Wolfe Research initiated coverage on DoorDash with an Outperform rating, citing strong demand trends, robust unit economics, and promising growth catalysts such as expansion into new verticals and international markets. However, BMO Capital reduced its price target on DoorDash due to concerns about the company's EBITDA margins for Q2 2024, while still maintaining an Outperform rating.
InvestingPro Insights
As Truist Securities maintains a bullish stance on DoorDash Inc. (NASDAQ:DASH), the latest metrics from InvestingPro reinforce some of the optimism surrounding the company's financial health and future prospects. With a market capitalization of $41.21 billion, DoorDash commands a significant presence in the industry. Notably, the company holds more cash than debt on its balance sheet, which is a positive sign for investors seeking a company with a strong liquidity position. Furthermore, analysts are forecasting net income growth this year, suggesting that DoorDash's strategic investments may yield tangible results. Despite the company not being profitable over the last twelve months, the expectation of profitability within the current year, as per analysts' predictions, offers a potential upside for investors.
InvestingPro Tips highlight that DoorDash's stock price has experienced considerable volatility, with a 23.72% drop over the last three months. However, this could present a buying opportunity for those who believe in the company's long-term strategy. Additionally, the platform lists several other tips, including a total of 10, which users can explore for a more comprehensive analysis. For readers interested in gaining deeper insights and additional tips on DoorDash, they can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
Investors considering DoorDash will also be interested in the company's revenue growth of 27.24% over the last twelve months as of Q1 2024, which aligns with Truist Securities' expectations of robust growth. The gross profit margin of 48.09% further underscores DoorDash's ability to maintain profitability on its services. With the next earnings date on August 1, 2024, stakeholders will be keen to see whether these positive trends continue to reflect in the company's financial outcomes.
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