On Thursday, Benchmark began coverage on DoorDash Inc. (NASDAQ:DASH) stock with a Buy rating and a price target of $165. The firm's analysis underlines DoorDash's expanding dominance in the restaurant delivery sector and the potential growth stemming from its large user and driver base. This scale is expected to benefit the company as it ventures into new business areas such as grocery, convenience, and general retail.
The analyst from Benchmark highlighted the anticipated increased revenue and contribution margin from these new verticals. These gains are projected to materialize over the next year and have not yet been factored into the current or consensus expectations for the company's financial performance.
DoorDash's valuation at $165 is based on a discounted cash flow (DCF) analysis. This analysis incorporates conservative assumptions about the company's gross order volume (GOV) and take rate growth in both the near term and the long term. The analyst's optimism is rooted in the potential monetization of emerging market segments that DoorDash is targeting.
The coverage initiation by Benchmark is set against the backdrop of a competitive food delivery industry where DoorDash has been making significant strides. With the company's efforts to diversify its services beyond restaurant delivery, the analyst sees a clear path to increased profitability and market share.
InvestingPro Insights
As DoorDash (NASDAQ:DASH) continues to navigate the competitive landscape of food delivery and expand into new markets, it's crucial for investors to consider the latest financial metrics and analyst insights. According to InvestingPro data, DoorDash holds a market cap of approximately $56.07 billion, with a significant revenue growth of 31.17% over the last twelve months as of Q4 2023. This growth is a testament to the company's expanding operations and its ability to scale effectively.
Despite not being profitable over the last twelve months, with an operating income margin of -6.66%, DoorDash's stock has demonstrated a strong return over the last three months, with a price total return of 47.8%. This performance reflects the market's optimism about the company's future profitability, as analysts predict DoorDash will turn profitable this year. Moreover, DoorDash's liquid assets exceed its short-term obligations, which is a positive sign of the company's financial health and its ability to manage cash flow.
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