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On Monday, RBC Capital Markets has raised its outlook on DoorDash Inc. (NASDAQ: NASDAQ:), upgrading the stock from Sector Perform to Outperform and increasing the price target to $175 from the previous $130.
The revision reflects a more optimistic valuation of the company’s future earnings before interest, taxes, depreciation, and amortization (EBITDA).
The upgrade is based on a variety of factors, including the potential stabilization of profitability in DoorDash’s New Verticals and International segments.
RBC Capital also recognizes the company’s consistent order growth, which is seen as a result of increased frequency of orders. This trend is expected to continue, contributing to mid-to-high-teens growth over the next several years.
DoorDash’s strategic moves, particularly the possibility of forming partnerships, are also highlighted as a positive development. A notable example is the potential collaboration with Lyft (NASDAQ:), which could lead to a significant increase in orders and enhance DoorDash’s loyalty program, making it more competitive with Uber (NYSE:)’s offerings.
While acknowledging that risks such as consumer spending behavior and the slower expansion into non-restaurant verticals exist, RBC Capital views these concerns as having a low probability of materializing. The firm anticipates upward revisions to DoorDash’s estimates in the future, suggesting confidence in the company’s growth trajectory.
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