DoorDash, Inc. (DASH) stock experienced a significant surge on Wednesday after KeyBanc analyst Justin Patterson upgraded the stock from Sector Weight to Overweight, assigning a $177 price target. Patterson’s bullish stance is driven by his belief that DoorDash is a clear share gainer within a sector experiencing secular growth, particularly benefiting from emerging revenue streams like advertising and expansion into new verticals such as grocery delivery.
When Patterson first initiated coverage of DoorDash prior to the second-quarter earnings release, he expressed optimism about the company’s fundamentals and long-term potential. However, he also expressed caution regarding near-term consumer spending trends, particularly within the restaurant sector.
However, Patterson’s concerns were alleviated after analyzing DoorDash’s second-quarter results. These results indicated a limited impact from weaker consumer spending and a broader trend of consumer resilience, suggesting that the softness in spending was localized rather than widespread. Additionally, Patterson’s latest survey findings reinforced DoorDash’s strong position in the food delivery market, revealing that the company is outpacing its competitors and demonstrating early signs of success in grocery delivery.
Patterson’s analysis also indicates that current market consensus is underestimating both Gross Order Volume (GOV) and EBITDA growth projections for 2025 and 2026. His estimates for these metrics surpass consensus by 2% and 3% for 2025 and 3% and 6% for 2026, respectively.
Applying a 20 times Enterprise Value to EBITDA valuation to his 2026E projections, Patterson arrived at a price target of $177.
Patterson’s enhanced confidence in DoorDash’s trajectory stems from his recent third-quarter Mobility and Delivery Survey and model assumptions. These analyses suggest that DoorDash is gaining ground in both its core and emerging verticals, positioning the company for sustained GOV growth exceeding 15% and driving EBITDA to $3.5 billion by 2026E, a figure approximately 6% above consensus.
Patterson’s survey highlighted DoorDash’s continued dominance in food delivery, with 39% of respondents reporting DoorDash as their primary choice, significantly outpacing Uber Technologies, Inc. (UBER) at 23 points. In the grocery delivery sector, DoorDash emerged as the preferred option for 8% of respondents, marking a notable 300 basis point increase since December 2023.
Patterson concludes that DoorDash’s strong core performance coupled with its rapid growth in new verticals will support his revised estimates for GOV growth of approximately 17% and 15% in 2025E and 2026E, surpassing the consensus of 15% and 13%. He also anticipates EBITDA of $2.6 billion and $3.5 billion for the respective years, exceeding consensus by 3% and 6%.
As of the last check on Wednesday, DASH stock was up 1.27% at $143.48.
