Source: Davit Kirakosyan
Oppenheimer Boosts DoorDash Price Target to $280
Financial research firm Oppenheimer has lifted its price target for food delivery company DoorDash (NASDAQ:DASH) to $280 from its previous prediction of $220. This optimistic revision reflects the company’s accelerating profitability, underpinned by robust order volumes and a surge in advertising revenue that exceeded expectations.
The research firm has decided to maintain an Outperform rating for the stock, an indicator that it expects DoorDash to outdo the overall market or its sector in the months ahead. This rating is often given to stocks believed to be undervalued or showing impressive growth potential.
Advertising Revenue Driving Profitability
Oppenheimer pointed to DoorDash’s recent announcement of $1 billion in advertising revenue as a significant sign of its escalating profitability. Advertising has become a crucial revenue stream for the company, contributing to its financial health and growth prospects. This is an outcome of the firm’s successful efforts to monetize its platform by displaying ads from restaurants and food brands.
Under Oppenheimer’s revised model, it anticipates DoorDash’s advertising revenue to escalate to a staggering $2.6 billion by 2027. This figure is derived by assuming an ad penetration of 2% of gross bookings, a rate similar to that of ride-hailing giant Uber’s current level.
Grocery Delivery Investments and Core Take Rate
Oppenheimer also notes that DoorDash’s investments in the grocery delivery segment are expected to shave its core take rate slightly by 70 basis points. The core take rate refers to the portion of the total transaction value that the company keeps. Despite this slight decrease, these investments are likely to help DoorDash diversify its revenue sources and reduce its dependence on restaurant deliveries.
Rising EBITDA Margins
The research firm predicts these dynamics to propel DoorDash’s EBITDA margins higher, from an estimated 2.8% of gross bookings in 2025 to 3.5% by 2027. This implies a 30% compound annual growth rate (CAGR) in EBITDA over that period. EBITDA margin is a financial ratio that measures a company’s operating profitability as a percentage of its total revenue, and an increase in this metric indicates improving profitability.
Impact of the Deliveroo Acquisition
Furthermore, the pending acquisition of food delivery company Deliveroo is expected to provide a boost to DoorDash’s financials. Oppenheimer estimates that the deal could be approximately 9% accretive to DoorDash’s 2027 EBITDA, adding a layer of optionality not yet factored into the company’s future estimates.
Improved Gross Order Value Forecasts
Oppenheimer has also slightly adjusted its gross order value forecasts for 2025 and 2026, increasing them by 1% and 2%, respectively. This adjustment is a response to stronger-than-expected quarter-to-date trends gleaned from third-party app data.
The new target price of $280 is based on a lofty 23x multiple of DoorDash’s estimated 2027 EBITDA. This represents a 36% premium to the stock’s peers, a premium justified by DoorDash’s impressive expected 51% faster EBITDA growth from 2024–2027 on an organic basis.
In conclusion, the revised price target by Oppenheimer solidifies DoorDash’s position as a growth stock in the food delivery sector, driven by robust advertising revenues, strategic acquisitions, and an expanding business model.