The year’s second quarter has been excellent for DoorDash (DASH) stock. Shaking off a winter slump and any fears that a post-covid environment will signal bad news for the food delivery service, shares have gained 41% during Q2.
The stock market gains have mirrored the real-world performance, where the company keeps exhibiting strong growth. As such, Wells Fargo’s Brian Fitzgerald thinks the Street is underestimating DoorDash’s prowess.
“The DoorDash story has shifted briskly from ‘sustaining FY20’s GOV (gross order value) run rate’ to ‘how many new geos & verticals, and how fast?’ With continuing strong est. Y/Y GOV growth in May (+43% Y/Y), and fears of share unlock supply passed, we think the share price now has a firm floor,” the 5-star analyst opined.
While Fitzgerald has kept his FY21 estimates as is, to reflect the company’s push into new territories, the analyst raised the FY22 and FY23 GOV estimates by 3% and 5%, respectively. As the street “catches up” to DASH’s ongoing press releases, Fitzgerald anticipates “upward revisions to estimates, resulting in sustained multiple expansion.”
Talking of new territories, earlier this month, the company made its debut in the Asian market with the launch of the app in Japan, marking the company’s third foray overseas after Australia and Canada. Japan boasts one of the biggest restaurant markets in the world, so it makes sense for the company to build on the global pandemic-driven demand for food delivery services.
It also looks like the company is planning further expansion with an entry into the highly competitive European market. The company has been looking to fill positions in Germany, according to jobs postings. Although DASH has yet to confirm it is entering the German market, Fitzgerald’s estimate revisions also reflect the “highly anticipated Germany expansion.”
Accordingly, Fitzgerald reiterated an Overweight (i.e. Buy) rating for the stock and raised the price target from $170 to $215, indicating shares will add ~21% in the year ahead. (To watch Fitzgerald’s track record, click here)
The Street’s take, however, suggests the shares are fully valued, given the average price target currently stands at $175.89. Rating wise, the analyst consensus rates DASH a Moderate Buy, based on 5 Buys and 7 Holds. (See DoorDash stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
