On Wednesday, DoorDash Inc. (NASDAQ:DASH) received an updated price target from JMP Securities, which increased it to $160 from the previous $130 while maintaining a Market Outperform rating. The adjustment reflects confidence in the company's core profitability and growth prospects.
JMP Securities' assessment of DoorDash's financial health focused on several key areas of the business. The analysis included the U.S. restaurant delivery sector, international operations such as those of Wolt, and newer business verticals. The firm projects that DoorDash's U.S. contribution margins will reach $4.5 billion by 2025, equivalent to a 5.9% margin, indicating a robust core profitability despite significant investments in new market segments.
The revised price target of $160 is based on a multiple of approximately 25 times the estimated EBITDA for the year 2025, which stands at $2.3 billion or 2.6% of the Gross Order Value (GOV). This represents an increase from the former multiple of around 21 times.
"Our ~25x multiple is a premium to peers, which we justify given DoorDash's leading share of U.S. restaurant delivery and optionality with new verticals including grocery," said the analyst.
InvestingPro Insights
The recent price target update for DoorDash Inc. (NASDAQ:DASH) by JMP Securities is supported by several notable metrics and InvestingPro Tips. DoorDash's market capitalization stands at a solid $56.67 billion, and the company has demonstrated a significant revenue growth of 31.17% over the last twelve months as of Q4 2023. This growth trajectory aligns with JMP Securities' confidence in the company's expansion and profitability.
An InvestingPro Tip highlights that DoorDash holds more cash than debt on its balance sheet, providing financial flexibility for continued investment in growth opportunities. Additionally, analysts predict the company will be profitable this year, which may further justify the premium valuation. On the performance front, DoorDash has seen a strong return over the last year with a 134.16% increase in stock price, trading near its 52-week high at 99.52% of the peak value.
For investors looking for more in-depth analysis, there are additional InvestingPro Tips available, including insights on earnings revisions and stock volatility. To explore these and other expert insights, visit InvestingPro and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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