DoorDash
stock has slipped since the food-delivery company reported earnings earlier this month, and
Morgan Stanley
thinks it’s time to buy.
Analysts led by Brian Nowak upgraded the stock to Overweight from Equal Weight and raised their price target to $145 from $135 in a Thursday report titled “DASHing Growth and Profitability.”
After posting mixed fourth-quarter results on Feb. 15,
DoorDash
shares have fallen 9.2% through Wednesday’s close, according to Dow Jones Market Data, but Morgan Stanley is optimistic.
“On growth, the company continues to deliver peer-leading and better than expected consumer spend and gross order value (“GOV”) results across its expanding platform…and we see that continuing,” the analysts wrote. As of the fourth quarter, nearly half of the company’s monthly active users were DashPass subscribers, and subscribers tend to spend more than nonsubscribers, they explained.
“We use this growing loyal (and more frequent) subscriber base
to show that even continued modest growth in subscribers and spend per subscriber can lead to mid-to-high teens forward GOV growth,” the analysts continued.
Morgan Stanley believe it’s likely the company will become profitable this year—by generally accepted accounting principles—and sees pathways for the shares to reach $175 through “higher US restaurant profit, faster growth, smaller incremental investment losses.”
DoorDash stock was up 5% to $120.28 in Thursday trading. Over the past 12 months, shares have soared 113%.
Write to Emily Dattilo at emily.dattilo@dowjones.com
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