On Friday, Piper Sandler shifted its stance on DoorDash Inc. (NASDAQ: NASDAQ:DASH), moving the stock's rating from Underweight to Neutral. In conjunction with the rating change, the firm significantly increased the price target for DoorDash shares to $127 from the previous $53.
The adjustment in rating reflects Piper Sandler's recognition of DoorDash's commendable management performance, especially considering the challenges posed by potential economic downturns. The firm acknowledges that while delivery services may not be as inherently retaining as mobility services in such times, DoorDash's execution has stood out.
DoorDash's ability to maintain consumer food delivery habits, which were largely established during the COVID-19 pandemic, has also contributed to the firm's upgraded outlook. These habits appear to have persisted into the post-pandemic era, indicating a lasting change in consumer behavior.
Despite the positive aspects of DoorDash's business, Piper Sandler points out that on a Generally Accepted Accounting Principles (GAAP) basis, DoorDash is valued higher than its peers for the expected 2025 earnings, with a Price to Earnings (P/E) ratio that implies much of the 'good news' is already reflected in the stock's price. This valuation suggests that investors have high expectations for the company's performance.
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