On Monday, Oppenheimer maintained an Outperform rating on Instacart (NASDAQ:CART) stock and raised its price target to $48 from the previous $36.
The firm views Instacart as a leading player within the Gig Economy, ranking it above Uber (NYSE:NYSE:UBER) and ahead of DoorDash (NYSE:NASDAQ:DASH), with the latter seen to have less upside potential.
The analysis suggests that the grocery delivery sector, where Instacart operates, presents a significant competitive moat compared to restaurant delivery services. This is due to the complexity of grocery delivery, positioning companies like Instacart, Amazon (NASDAQ:AMZN), and Walmart (NYSE:NYSE:WMT) more advantageously against competitors such as Uber and DoorDash.
While Uber's increased focus on profitability over market share in the UCAN GB (Uber's Canada and U.S. operations) segment is expected to benefit DoorDash, the analyst indicates that without a larger grocery business, DoorDash might encounter limitations in growth. Conversely, Uber is foreseen to potentially displace car ownership over time.
The report also suggests that current Street estimates may be too conservative for Uber's UCAN GB segment. Oppenheimer reiterates its $90 price target on Uber, which represents approximately a 30% upside from its current level. Additionally, DoorDash's price target has been increased to $150 from $140, signaling an estimated 15% upside.
InvestingPro Insights
As Instacart (NASDAQ:CART) receives a favorable outlook from Oppenheimer, InvestingPro data and tips offer additional insights into the company's financial health and market performance. Instacart boasts a substantial market capitalization of $9.23 billion, indicating its significant presence in the industry. Reflecting on the company's financial efficiency, Instacart's impressive gross profit margin stands at nearly 74.88%, showcasing its ability to manage costs effectively relative to its revenue.
With a revenue growth of 19.25% over the last twelve months as of Q4 2023, Instacart is demonstrating its capacity to expand its business in the competitive grocery delivery sector. Notably, InvestingPro Tips highlight that Instacart holds more cash than debt on its balance sheet and that analysts predict the company will be profitable this year, providing a positive outlook for potential investors. Despite not paying dividends, Instacart has experienced a strong return over the last three months, with a price total return of 34.04%.
For those looking to delve deeper into Instacart's financials and performance metrics, InvestingPro offers additional tips that can be accessed through the Instacart-specific page. As an incentive, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting further access to valuable market insights and analysis.
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