DoorDash's core profitability in 2024 is projected to be significantly enhanced by an increase in gross order volume and sustained operating leverage. This forecast comes as the food delivery giant continues to make strides in both its established and emerging sectors, as noted by analysts at KeyBanc Capital Markets.
The brokerage has revised its estimates for DoorDash, predicting adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.87 billion for the current year, a notable increase from the prior forecast of $1.69 billion. The marketplace gross order volume is anticipated to reach $79.46 billion, advancing from KeyBanc's previous estimate of $78.61 billion, which is attributed to a surge in order growth. KeyBanc analysts, led by Justin Patterson, have expressed a positive outlook on DoorDash, describing it as a clear leader in a category characterized by secular growth.
They also highlighted emerging revenue streams from advertising and new verticals such as grocery delivery. The analysts contend that Wall Street may be underestimating the growth potential of DoorDash's gross order volume and EBITDA for the fiscal years 2025 and 2026. The brokerage upgraded DoorDash’s stock rating from sector weight to overweight and set an ambitious price target of $177 per share.
Initial concerns surrounding near-term consumer spending, particularly in the restaurant sector, have been alleviated following the company’s strong second-quarter results. Patterson commented, "Coupled with a broader set of reports showing resilience, we left (the second quarter) viewing consumer softness as more localized than widespread." Furthermore, KeyBanc's findings from their third-quarter mobility and delivery survey underscored their belief that DoorDash continues to outpace its competitors in the food delivery market and is beginning to show promising results in the grocery sector. In a related observation, KeyBanc perceives slight upside potential for ride-hailing platform Uber Technologies, which stands to benefit from recent fluctuations in foreign exchange rates.
The brokerage now anticipates that Uber will achieve adjusted EBITDA of $6.45 billion in 2024, an increase from the earlier estimate of $6.36 billion. Patterson further elucidated, "We believe operational efficiencies should support faster EBITDA growth than our model previously expressed." As a result, KeyBanc has increased its price target for Uber to $90 from a previous expectation of $80, maintaining an overweight rating on the stock. In summary, both DoorDash and Uber are poised for substantial growth in 2024, driven by enhanced operational efficiencies and emerging market opportunities..