Wolfe Research Upgrades Instacart (CART) to Outperform, 'see several paths for shares to Outperform'

Wolfe Research analyst Deepak Mathivanan upgraded Instacart (NASDAQ: CART) from Peerperform to Outperform with a price target of $35.00.

The analyst comments "In terms of fundamentals, CART's GTV growth has decelerated steadily over the last few quarters due to moderation in COVID tailwinds and some NT macro headwinds from high inflation in the category. Looking ahead, there are plenty of uncertainties on MT GTV growth with rising competition. However, we think CART has several levers to improve efficiencies on logistics and advertising and achieve healthy revenue growth. Margins should improve from fixed cost leverage over the next several years. Meanwhile, sentiment on shares is muted currently, not only due to questions on LT growth but also from tactical NT headwinds such as upcoming lock-up expiration. As such, shares are trading at 6x FY25 EBITDA, which is among the lowest in our coverage universe. While we have some reservations on LT growth, we do not see any structural reasons for CART to trade at such depressed levels, typically for broken businesses. We find CART's current valuation attractive from a risk/reward standpoint. We also believe CART shares could outperform with potential merger with a strategic such as UBER."

For an analyst ratings summary and ratings history on Instacart click here. For more ratings news on Instacart click here.

Shares of Instacart closed at $23.88 yesterday.

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