Analysts at Deutsche Bank initiated DoorDash (NASDAQ:DASH) with a Buy rating and $125 per share price target in a note Thursday.
The price target represents a potential 30% upside in DASH shares, which are up more than 89% in 2023.
"DoorDash's core markets in restaurant, grocery, convenience, and retail delivery are massive and measure at around $6.7trn," the analysts explained. With DoorDash capturing only 1% of its overall market via users that represent only 7% of available homes, there is ample runway for user growth from here."
The analysts added that DoorDash's ability to take share of these opportunities while also growing profitability despite a more strained global consumer has been on full display in 2023.
"Thus, we'd argue this should give investors confidence in underwriting the idea that DoorDash will be one of the prime beneficiaries of digital transformation trends within these multi-trillion markets over the coming years," the analysts added.
Furthermore, the investment bank expects DoorDash to continue to drive fixed cost leverage "via impressive order growth, while consistently optimizing the different variable and semi-variable costs in its business."