Analysts Stick With DoorDash Despite Soft Guidance

One analyst says DoorDash's pullback is 'an opportunity for investors to reload on a fast-growing market leader.'
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Analysts were sticking with DoorDash  (DASH) - Get Report Friday after the food-delivery company beat Wall Street's fourth-quarter revenue estimates but warned growth likely will slow as the U.S. economy reopens.

Shares of the San Francisco company were down 5% to $158.48 on Friday.

DoorDash, which went public in December in one of the biggest initial public offerings of the year, said revenue rose to $970 million in the fourth quarter, up from $298 million a year ago. The company also reported a loss of $312 million, or $2.67 a share.

In a note titled "Reload on the pullback," Deutsche Bank analyst Lloyd Walmsley raised his price target to $190 a share, up from $185.

"We understand the negative reaction from a contribution profit miss in the first quarter as a public company," said Walmsley, who has a buy rating on the stock, "but view this pullback as an opportunity for investors to reload on a fast-growing market leader with best-in-class execution and an enormous (total addressable market) ahead of it."

J.P. Morgan analyst Doug Anmouth, who rates DoorDash neutral with a $160 price target, said the coronavirus pandemic "significantly accelerated consumer adoption of food delivery, and we believe food delivery is a forever-changed category."

The analyst said this activity will remain elevated "as consumers continue to value the convenience and selection and restaurants will continue to value the incremental revenue stream."

While DoorDash is assuming a scaled global vaccine dissemination in the second and third quarters could drive increased churn, decreased order frequency and lower average basket sizes, Anmouth said weekly order sizes have been growing in states that reopened.

Oppenheimer analyst Jason Helfstein maintained his perform rating on DoorDash "as shares continue to trade at a 26% premium relative to peers, fully rewarding DASH for its market leadership position and solid execution, thus far."

"We believe DoorDash can leverage its early focus on suburban markets to gain traction in Tier-1 markets and continue expanding its current market leader position," Helfstein said. "Separately, we are positive on the firm's strategic move into grocery delivery though we need to see further evidence of positive execution given historical rhetoric surrounding grocery unit economics."