DoorDash Gets First Analyst Rating: Here's Why He's Bullish

Food delivery company DoorDash has yet to list its stock in a public exchange, but The Street is out with its first rating.

The Analyst: DA Davidson analyst Tom White initiated coverage of DoorDash's DASH stock with a Buy rating and $93 price target.

The Thesis: DoorDash was founded in 2013 and has grown to capture a 17% market share of the U.S. food delivery platform by early 2018 and expanded to command a 36% market share at the start of 2020. Over the following months, DoorDash expanded its U.S. market share to 50%.

White said DoorDash has a path to continue growing sales as the ratio of off-premise restaurant sales continue to grow over time. In fact, certain key DoorDash metrics show the company is in the very early stages of growth.

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Specifically, the platform oversaw $8 billion of gross order value in 2019 and this is less than 3% of total off-premise restaurant spend. Also, DoorDash's 18 million monthly consumers represent less than 6% of the entire U.S. population.

Finally, DoorDash's stock could be priced at $80 per share at the midpoint of the expected pricing range. The research firm's $93 price target is based on six times 2022 EV/Sales and 42 times 2022 EV/EBITDA.