DoorDash price target boosted on ad revenue growth, Deliveroo upside

Oppenheimer analysts raised DoorDash's price target to $280 from $220, maintaining an 'Outperform' rating, driven by stronger-than-expected Q2 order growth of 18.6% and accelerating advertising revenue, projected to reach $2.6 billion by 2027. This underpins a forecast of 30% adjusted EBITDA CAGR through 2027, with margins improving to 3.5% of gross bookings, and justifies a premium valuation over peers due to expected faster organic EBITDA growth, with additional upside from a potential Deliveroo acquisition.

Analysis

Oppenheimer has raised its price target for DoorDash (DASH) to $280 from $220, maintaining an 'Outperform' rating, based on two primary drivers: accelerating advertising revenue and robust order growth. Third-party data indicates second-quarter order growth is tracking at 18.6% year-over-year, outpacing prior estimates and prompting an increase in FY25-FY26 gross order value forecasts. More significantly, the advertising business is projected to expand to $2.6 billion by 2027, from approximately $1 billion today, by reaching a 2% penetration of gross bookings, a level consistent with peer Uber. This high-margin revenue stream is expected to fuel a 30% compound annual growth rate in adjusted EBITDA through 2027 and drive EBITDA margins from 2.8% to 3.5% of gross bookings, effectively offsetting the 70 basis points of take-rate dilution from the lower-margin grocery segment. The analysis suggests a clear path to $4.5 billion in 2027 EBITDA even before factoring in the pending Deliveroo acquisition, which is viewed as a source of further upside potentially boosting 2027 EBITDA by 9%. DoorDash's updated valuation at a 23x 2027 EBITDA multiple, a 36% premium to peers, is justified by its projected 51% faster organic EBITDA growth from 2024 to 2027.

Key Decisions for Investors

• The combination of accelerating, high-margin advertising revenue and stronger-than-expected core order growth provides fundamental support for a continued bullish outlook on the stock.
• Investors should view the pending acquisition of Deliveroo as a material upside catalyst not yet incorporated in consensus models, which could add an estimated 9% to 2027 EBITDA upon successful integration.
• While the stock's 36% valuation premium to peers appears justified by superior growth forecasts, it is crucial to monitor the company's execution on both advertising penetration and margin expansion to ensure this premium remains warranted.