DoorDash Inc. (NASDAQ:) received an updated price target from JMP Securities on Wednesday, increasing 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 company. The analysis included the U.S. restaurant delivery industry, international operations such as Wolt’s, and new verticals. The company expects DoorDash’s U.S. contribution margins to reach $4.5 billion by 2025, equivalent to a 5.9% margin, indicating solid underlying profitability despite significant investments in new market segments .
The revised price target of $160 is based on a multiple of approximately 25 times estimated full-year 2025 EBITDA, which amounts to $2.3 billion or 2.6% of gross order value (GOV ). This represents an increase from the previous multiple of approximately 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,” the analyst said.
Insights on InvestingPro
The recent price target update for DoorDash Inc. (NASDAQ:DASH) by JMP Securities is supported by several important metrics and recommendations from InvestingPro. DoorDash’s market capitalization stands at a whopping $56.67 billion and the company has demonstrated significant revenue growth of 31.17% over the trailing twelve months as of Q4 2023. This growth trajectory is on track with JMP Securities’ confidence in the company’s expansion and profitability.
A tip from InvestingPro highlights that DoorDash holds more cash than debt on its balance sheet, providing financial flexibility for continued investment in growth opportunities. Additionally, analysts expect the company to be profitable this year, which could further justify the premium valuation. On the performance front, DoorDash has posted a strong return over the past year with a 134.16% increase in its stock price, trading near its 52-week high at 99.52% of its peak value.
For investors looking for more in-depth analysis, there are additional InvestingPro tips, including insights into 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% discount on the annual or biennial Pro and Pro+ subscription.
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