On Friday, RBC Capital Markets adjusted its outlook on shares of DoorDash Inc. (NASDAQ: NASDAQ:DASH), raising the price target to $215 from the previous $175, while keeping an Outperform rating on the stock. The adjustment follows a virtual meeting with the DoorDash Investor Relations team, which provided several insights into the company's operations and strategy.
The company's approach to balancing growth with profitability was highlighted as a positive sign, particularly with EBITDA expected to be within the guidance range. This balance is seen as a key driver for sustained growth and a stable stock multiple. Moreover, the hiring of sales personnel is anticipated to contribute to new supply, which is expected to generate predictable incremental demand.
Further confidence stems from commentary on Wolt, a recently acquired food delivery company, regarding its scalability and profitability. The diversity of DoorDash's customer demographics also appears to be broader than initially anticipated, which could indicate a robust market reach. Moreover, advertising growth within the company is described as measured and healthy, suggesting a sustainable trajectory.
The analyst noted that early responses to the DashPass sign-up initiative, sourced through a partnership with Lyft (NASDAQ:LYFT), have been positive. DoorDash's openness to further mergers and acquisitions was also mentioned as a factor that could influence the company's future growth.
The raised price target is based on a 34x enterprise value to estimated 2025 EBITDA multiple. This valuation also implies a 25x multiple based on the market's 2026 estimates. RBC Capital's outlook reflects a belief in DoorDash's continued investment in core areas as well as expansion into grocery, retail, and international markets, all while maintaining a clear focus on profit expansion.
The firm reiterated its Outperform rating on DoorDash, recognizing it as a high-quality name that has yet to be included in any major index.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.