On Tuesday, Loop Capital maintained a Buy rating on DoorDash Inc. (NASDAQ: NASDAQ:DASH) and increased the company's price target to $200 from the previous $170. The adjustment reflects a new valuation based on 25 times the firm's projected 2026 EBITDA, a change from the 27 times EBITDA multiple used previously.
The analyst at Loop Capital cited DoorDash's continued excellence in execution as a key factor for the positive outlook. The firm believes that DoorDash is significantly under-earning considering its capabilities in handling the complexities of local commerce operations. The analyst's confidence is bolstered by DoorDash's consistent incremental improvements in its business.
Loop Capital introduced their forecast for the year 2026, which played a role in the decision to raise the price target. The new forecast takes into account the long-term earnings potential of DoorDash, which the firm believes is not fully reflected in the current valuation due to ongoing investments in retail, international expansion, and advertising efforts.
The analyst emphasized that DoorDash has established itself as a leader in solving the operational challenges of providing local commerce. This expertise is expected to drive the company's growth and contribute to a more valuable business in the coming years.
Reiterating the Buy rating, Loop Capital sees a robust earnings power in DoorDash's operational model that is currently understated. The firm anticipates that the company will become significantly more valuable as it continues to invest and expand its services.
In other recent news, DoorDash has shown robust growth in its Q3 results, with a 19% increase in Gross Order Value (GOV), surpassing both DA Davidson's and consensus estimates. The company's adjusted EBITDA for the quarter was reported at $533 million, exceeding projections. DoorDash's revenue and GOV were also higher than anticipated, contributing to an optimistic outlook for Q4.
The company announced a partnership with Lyft (NASDAQ:LYFT), aiming to enhance the value proposition of DoorDash's subscription service, DashPass. Analyst firms DA Davidson and Oppenheimer have increased their price targets for DoorDash, based on the company's strong performance, international expansion, and grocery segments.
DoorDash's international business is now gross profit positive, showing improved contribution margins similar to those in the U.S. The company's revenue growth has outpaced GOV growth, driven by advertising and efficient Dasher costs. These recent developments reflect DoorDash's commitment to growth and operational efficiency in the dynamic competitive landscape of the delivery sector.
InvestingPro Insights
DoorDash's recent performance aligns with Loop Capital's optimistic outlook. According to InvestingPro data, the company's revenue growth remains strong, with a 24.56% increase over the last twelve months as of Q3 2024, reaching $10.15 billion. This growth trajectory supports the analyst's view on DoorDash's execution excellence and potential for increased earnings.
InvestingPro Tips highlight that DoorDash's net income is expected to grow this year, and analysts anticipate sales growth in the current year. These projections reinforce Loop Capital's confidence in the company's future performance. Additionally, DoorDash holds more cash than debt on its balance sheet, providing financial flexibility for its ongoing investments in retail, international expansion, and advertising efforts.
The market seems to share this positive sentiment, as DoorDash's stock has shown a remarkable 100.01% price total return over the past year. However, investors should note that the stock is trading near its 52-week high, with an RSI suggesting it may be in overbought territory.
For readers interested in a deeper analysis, InvestingPro offers 18 additional tips for DoorDash, providing a comprehensive view of the company's financial health and market position.
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