Analyst Upgrades Highlight DoorDash’s Comeback Potential
DoorDash (NYSE:DASH), a food delivery service, has been making waves in the food industry for some time now. On Monday, the company received a strong vote of confidence from Morgan Stanley. The company initiated coverage on DASH stock with an Equal-weight rating.
Brian Nowak, a renowned analyst, has released optimistic predictions for DASH in the food delivery market. This can be partially attributed to the DashPass program that has created a large high-frequency DashPass member base. DASH also owns leading dynamics in the industry, like an opt-in incentive scheme that enables it to continue to drive this business sector.
Morgan Stanley says investors should be cautious of the high valuation of DASH concerning their FY2023 revenue estimate. The investment bank is waiting for a better entry point. Nevertheless, it sees an opportunity in the long-term “growth story” potential for DASH.
DoorDash secured another bullish rating from Citi in early April. The firm initiated coverage of the stock with a ‘Buy’ rating, saying it’s likely that DoorDash will continue to grow by becoming more diversified in the food delivery market and expanding internationally. Their timeline for more expansion includes quick commerce services and their Drive Platform.
Ronald Josey, the analyst, pointed out that DASH has a consistent 20% contribution margin of orders delivered. DoorDash is on the up and up, but it’s crucial to focus on sustainability and maintaining a steady cash flow. Here he believes DASH is delivering.
Morgan Stanley has a stock price target of $100, and Citi has an aggressive estimate of $155. DASH stock closed at $82.22 on Wednesday.
These bullish ratings reiterate that the stock may have bottomed out, so the time is ripe for purchasing DASH.
DASH Stock Is a Buy After the Steep Correction
Although the tech sector has felt the brunt of the recent market drop, DASH stock is one of the hardest hit. As the Federal Reserve signaled more rate hikes throughout most of 2022, investors bought out expensive stocks and went into value stocks. For example, DASH stock now trades below its IPO price at $102 per share.
Along with inflation concerns, investors also raised concerns about how a rise in labor and food prices impacted company earnings.
However, after the steep price correction, there is merit to treating DASH stock as a value play. The company has also expanded internationally in recent years following its acquisition of a popular delivery service, Wolt, which has allowed the company to enter 22 different markets in Europe.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
