DoorDash a ‘category killer’ in the restaurant delivery space (DASH) – Seeking Alpha
A “category killer” in the U.S. restaurant delivery space, DoorDash (NASDAQ:DASH) carries a valuation premium versus its peers that Loop Capital believes is justified by its higher growth rate, best-in-class execution and earnings power that is meaningfully understated. The firm initiates coverage of the food-delivery company with a Buy rating and $170 price target, 30% upside to Thursday’s closing price.
DoorDash (DASH) holds 65% of the U.S. market and is growing quickly into grocery and many other retail categories. With shopping behavior “undeniably” moving toward digital channels, this puts DoorDash (DASH) in prime position to capitalize on challenges with last-mile logistics. High-frequently takeout purchases will also be the “anchor to drive growth across a portfolio of conveniences, grocery and other retail items in the DoorDash marketplace,” Loop Capital analyst Rob Sanderson said in Friday’s research note.
Although merchants have a “love-hate” relationship with delivery services because of fees and allowing an intermediary to control the customer experience, Sanderson claims DoorDash (DASH) generated $50B in sales for merchants in 2023, up 23% year-over-year. Since merchants had little choice but to embrace delivery services during the pandemic, they have subsequently adjusted to this reality, many of whom raised prices for items ordered through a third party.
And the emerging autonomous driving technology will become a “meaningful positive” for DoorDash (DASH) Sanderson says. “We think that booming interest in AI will bring autonomy back to the forefront and delivery robots will eventually become a meaningful unlock for the economic model,” he added.
In its most recent quarter, DoorDash (DASH) reported a loss of $0.39 per share, missing estimates for a loss of $0.14 per share, on $2.3B in sales, which was in-line with expectations.
Analysts are mostly bullish on DASH with Seeking Alpha authors and Wall Street analysts rating the stock as a Buy. Seeking Alpha’s Quant Rating views DASH as a Hold.
