Shares of DoorDash (DASH) - Get DoorDash Report were rising Wednesday after an analyst at Truist Securities raised the price target on the food delivery service to $250 a share from $220 as the investment firm is bullish about its fiscal-third-quarter earnings.
Shares of the San Francisco, Calif., company on Wednesday closed 2.9% lower to $205.26 in the regular session.
Truist Securities analyst Youssef Squali maintained DoorDash at a buy rating and raised its price target to $250 a share, a 25% increase from Tuesday's closing price of $199.50 a share.
Squali in a research note wrote that he anticipates better-than-expected third quarter results and "sustained momentum" for the company.
"While the economy is reopening, DoorDash continues to benefit from positive momentum in food delivery and from early traction in non-restaurant segments," he wrote.
"Proprietary credit card data through end of September and survey results support this positive stance," Squali told investors in a research note.
Separately, California Gov. Gavin Newson on Tuesday night signed a law that prohibits food-delivery apps from charging customers more than restaurants do. It addresses hidden fees by requiring the companies to disclose to restaurants and customers a detailed cost breakdown of each transaction.
"Gig companies have profited during the pandemic by keeping consumers and restaurants in the dark about the true cost of their services,” said state Assemblywoman Lorena Gonzalez, D-San Diego, who wrote the bill, in a statement. “Now, small restaurants and their customers will know what they’re being charged upfront and get to see exactly how much is actually benefiting the restaurant.”
The bill, will take effect Jan. 1, 2022.
Last month, DoorDash sued New York City over a new law requiring food delivery companies to share customer data with restaurants, saying that the law violates customer privacy.
New York City defended the law with Nicholas Paolucci, spokesman for the city's law department telling Reuters that "the law puts customers first. It puts them in control of their information when they place orders through these apps."