© Reuters Jefferies says consensus underappreciates DoorDash (DASH) EBITDA tailwinds
DoorDash (NYSE:) was upgraded to Hold from Underperform at Jefferies on Monday, with analysts raising the price target to $90 from $70 per share.
The analysts told investors in a note that the online food ordering and delivery company has a “DASHing EBITDA outlook.”
“Our profit decomposition suggests consensus underappreciates tailwinds to EBITDA from further advertising penetration and enhancements to underlying unit economics,” they wrote.
They explained that Jefferies split DASH’s profitability into three categories: U.S. Restaurant Delivery, Int’l Restaurant Delivery, and New Delivery Verticals. They estimate more than 100% of EBITDA is currently derived from U.S. Restaurant Delivery.
“Combining our category level estimates for GOV and Margins arrives at $1.5B/2.6B in ’24/’25 EBITDA and 8%/7% upside to consensus. Our analysis also shows DASH has a long runway for margin expansion, with EBITDA growing ~3.5x faster than GOV over the next 5 yrs (54% vs. 14% ’22-’27 CAGR), driven by further advertising penetration and improvements to underlying economics,” they explained.
The analysts also contend that Instacart’s IPO disclosure also improves the firm’s confidence in margin expansion at grocery and convenience.
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