DoorDash Inc DASH has announced a new partnership with BJs Wholesale Club Holdings Inc BJ in which even non-BJ's members can get same-day grocery delivery through BJs.com. The partnership covers all 226 BJ's locations in 17 different eastern U.S. states.
The Numbers: On Tuesday, Bank of America analyst Michael McGovern said DoorDash is very well-positioned to gain market share in the massive $830 billion U.S. grocery, convenience and alcohol market, which he estimates is only about 8% penetrated by online sales today. McGovern said DoorDash is the market leader in online convenience, but it is currently trailing in the grocery category behind Amazon.com, Inc. AMZN, Walmart Inc WMT and Instacart.
"With much faster delivery speeds than some competitors, DoorDash is poised to take share in Grocery, particularly with improved supply and new partnerships that add delivery options," he said.
DoorDash isn't the only delivery service that has announced major grocery partnerships. Uber Technologies Inc UBER recently added Costco Wholesale Corporation COST as a grocery delivery partner as well.
McGovern estimates DoorDash and Uber generated a combined $5 billion in non-restaurant delivery bookings in 2021, up 132% year-over-year.
How To Play It: Despite the ongoing pandemic recovery and rising grocery inflation, Bank of America estimates online food spending is up 6% in the first quarter compared to 2021. McGovern said investors can anticipate more grocery delivery partnerships for DoorDash in the near future, which could serve as a bullish catalyst for the stock.
Bank of America has a Buy rating and $200 price target for DoorDash, and a Buy rating and $55 price target for Uber.
Benzinga's Take: DoorDash is a great option for investors looking for a delivery pure-play stock. Uber's business is more diversified, given it has both a large delivery business and a large mobility business.
Photo: courtesy of doordash.news
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.