A lack of physical mobility and an acceleration in digital use drove convenience-based business models to flourish during the COVID-19 pandemic. Food delivery platform DoorDash, Inc. (DASH) was no exception, which experienced high levels of growth and eventually went public last December. After an impressive Q3 earnings print, the company recently announced the acquisition of Finnish delivery firm Wolt, a move which analysts are largely bullish on. (See Analysts’ Top Stocks on TipRanks)
One of those analysts is Brian Fitzgerald of Wells Fargo, who opined that Wolt is a proper fit for DASH and will ramp up its footprint in international spheres. The $8.1 billion takeover almost doubles DASH’s serviceable addressable market, and is expected to allow DoorDash management to remain focused on U.S. expansion.
Fitzgerald rated the stock a Buy, and raised his price target to $260 from $235. This new target represents a potential 12-month upside of 21.36% from current levels.
The five-star analyst went on to write that “Wolt represents a springboard into the European market for DASH, accelerating time to market entry, providing additional management bandwidth as well as a platform purpose-built for further expansion into additional international markets.”
Wolt currently serves 23 countries and was characterized by Fitzgerald as an efficient company with high rates of retention from its installed base.
As far as its organic growth, DoorDash has been performing. It beat Wall Street consensus estimates on revenue and EBITDA, and has been achieving all-time high levels of new membership and activity on its DashPass program.
The company has been experiencing order rates beyond pre-COVID levels from newly acquired users, and is increasing its partner merchants at an encouraging pace.
That being said, TipRanks’ unique Website Traffic data shows a considerable divergence in share price to online volume. In Q3, it can be identified that total device visits to doordash.com have declined 4.13% quarter-over-quarter, while the stock rose 15.5% by the end of Q3.
Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.
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