DoorDash (DASH) Soars as BofA Upgrades to Buy on Upside to 2021 Estimates and Robust Mid-term Growth Opportunity

September 16, 2021 7:05 AM EDT
Get Alerts DASH Hot Sheet
Price: $215.37 +0.61%

Rating Summary:
    12 Buy, 8 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 15 | Down: 25 | New: 91
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BofA analyst Michael McGovern upgraded DoorDash (NYSE: DASH) to Buy from Neutral as he sees upside to 2021 estimates and a robust 5-year growth opportunity for the delivery company.

The analyst also raised the price target to $255.00 per share from the prior $190.00 as he sees a trend of the rapid shift of local commerce to delivery via mobile apps.

“We expect non-restaurant ordering to help mitigate much of the post-pandemic drop in restaurant ordering, with numerous new partnerships underscoring DoorDash’s strong position in the sector. From 2021 to 2026, we expect Online penetration of Grocery, Convenience, and Alcohol spending to increase from 8% in ’21 to 16%, and expect non-Food applicable retail to increase from 2% to 10%. For core restaurant spending, BAC aggregated credit and debit card data suggests the category is holding up better than expected, with growth accelerating to 17% Y/Y for the week of 9/4. Investment highlights: continuing market share gains and unit economics advantage vs. peers, and catalysts include new partnerships and international expansion,” McGovern said in a client note.

Wall Street is projecting 14% growth for DASH in 2022, but McGovern expects “meaningful upside” driven by the non-Restaurant expansion. Moreover, the online penetration of restaurant spending also remains higher.

The analyst raised 2022E GOV growth from 22% to 25%, which paves the way for a hike in revenue growth from 28% to 34%. He also expects the company to post “modest share gains” in the 2021-2026 period, going from 51% of 3P bookings to 55%.

“We see DoorDash as having the most estimate upside potential in our travel/transportation coverage,” the analyst adds.

The BofA upgrade call comes just three days after Goldman started the research coverage of DASH with a Neutral rating and a price target of $187.00.

Shares of the company are up over 2% in pre-open Thursday.

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