JPMorgan upgrades DoorDash, says shares can keep outperforming on global expansion

JPMorgan upgraded DoorDash to an Overweight rating, raising its price target to $325, driven primarily by the strategic acquisition of Deliveroo. This acquisition expands DoorDash's global footprint to 45 countries, notably in Western Europe and the Middle East, and adds 7 million monthly active users, significantly increasing its total addressable market. The bank anticipates DoorDash will aggressively reinvest profits to scale the Deliveroo business, enhance customer acquisition, and improve subscription offerings, while also leveraging its operational expertise for efficiencies. Additional growth catalysts include the recent Kroger partnership and a projected $3 billion in advertising revenue by 2027.

Analysis

JPMorgan has significantly upgraded DoorDash (DASH) to an Overweight rating from Neutral, raising its price target to $325 from $175, implying a 19% upside despite a 63% year-to-date surge. This bullish revision is primarily driven by the strategic acquisition of Deliveroo, which is expected to expand DoorDash's global footprint and growth prospects.

The Deliveroo acquisition expands DoorDash's operational presence into nine new markets, bringing its total to 45 countries and adding approximately seven million monthly active users to its platform. This M&A activity significantly broadens DoorDash's Total Addressable Market (TAM) in Western Europe and the Middle East, where aggressive reinvestment in customer acquisition and subscription offerings is anticipated to scale the business. JPMorgan expects DoorDash to leverage its operational and logistics expertise to drive efficiencies within the Deliveroo business.

Further growth catalysts include the recent integration of Kroger's 2,700 stores onto the DoorDash platform, enhancing its offerings. Additionally, the analyst identifies a substantial advertising opportunity, projecting approximately $3 billion in revenue by 2027 if ad monetization reaches 2% across both DoorDash and Deliveroo platforms. These factors collectively underpin JPMorgan's optimistic outlook for DoorDash's future performance.

Key Decisions for Investors

• Investors should consider the significant upside potential indicated by JPMorgan's upgraded price target, driven by strategic M&A and new market expansion.
• Monitor DoorDash's execution on integrating Deliveroo, particularly its reinvestment strategies for market share gains and operational efficiencies in new regions.
• Evaluate the long-term revenue growth trajectory from the expanded Total Addressable Market, the Kroger partnership, and the projected $3 billion advertising monetization opportunity by 2027.