Goldman Sachs reinstates DoorDash stock with Buy rating following Deliveroo deal

Goldman Sachs has reinstated coverage on DoorDash (DASH) with a Buy rating and a $315 price target, citing strong core Gross Order Value (GOV) outperformance and the strategic integration of Deliveroo. The firm raised its core DoorDash GOV estimates by 5-10% for 2025-2027, projecting investments to accelerate Deliveroo's growth despite potential near-term impacts on its incremental EBITDA margins. This positive outlook is largely echoed by other analysts like BTIG and Truist, who maintain Buy ratings and higher price targets, while allegations regarding unauthorized worker practices had minimal impact on the stock, which has returned 71% over the past year.

Analysis

Goldman Sachs has reinstated coverage on DoorDash (DASH) with a Buy rating and a $315 price target, following the completion of its Deliveroo acquisition. This positive outlook is underpinned by strong core DoorDash operations, with first-quarter Gross Order Value (GOV) exceeding prior estimates by 0.4% and second-quarter GOV approximately 5% higher than expected. Consequently, Goldman Sachs has raised its core DoorDash GOV estimates by 5-10% for the 2025-2027 period.

The integration of Deliveroo is a key driver for the revised model, with DoorDash expected to invest in accelerating Deliveroo’s growth from high single digits to low-teens percentages. While this strategy is anticipated to result in lower incremental EBITDA margins for the Deliveroo segment, it signals a commitment to market expansion. Other analysts largely echo this sentiment, with BTIG maintaining a Buy rating and a $315 target, and Truist Securities raising its target to $340, both citing the Deliveroo acquisition's potential to significantly boost GOV.

Despite some cautious stances, such as Stifel's Hold rating and Barclays' Equalweight initiation, the overall analyst sentiment remains optimistic, aligning with a "strongly positive" general sentiment score of 0.75. Notably, allegations from Culper Research regarding unauthorized worker practices had minimal impact on the stock, which experienced a slight rise, reflecting investor confidence in DASH's trajectory and its impressive 71% return over the past year.

Key Decisions for Investors

• Consider initiating or increasing long positions in DASH given the strong analyst consensus and positive growth outlook post-Deliveroo acquisition, Monitor DoorDash's execution on accelerating Deliveroo's growth and the associated impact on EBITDA margins, Watch for further details on the integration of Deliveroo and any potential operational challenges or regulatory scrutiny related to worker practices.