Shares of DoorDash Inc. (DASH) received conflicting opinions from analysts over the weekend. While one firm downgraded the delivery app, another upgraded it due to its size and resilient consumer spending. Mizuho analysts, in a note dated Sunday, raised their rating to a buy and increased the price target from $90 to $105.
DoorDash has been experiencing continued market share gains in the United States, thanks to its category-leading position. The Mizuho analysts believe that rational competition in Europe, along with moderated food inflation and resilient consumer spending, will further support the company’s growth.
However, MoffettNathanson analysts expressed concerns about demand for food delivery being affected by the return of student loan payments. Despite these diverging opinions, DoorDash is focused on expanding its delivery services beyond restaurants and into other areas of retail.
The Mizuho analysts also mentioned that increased labor supply has helped DoorDash keep costs under control. They highlighted the company’s capacity for investment in new categories, revealing that 30% of contribution profits from the U.S. restaurant business were reinvested in the third quarter of 2022. With potential rationalization in the future, DoorDash’s bottom line is expected to benefit.
Year-to-date, DoorDash’s shares have surged by 72%, surpassing the S&P 500 Index, which has risen 16.7% during the same period.