Food delivery firm DoorDash (DASH) announced major investment plans for Fiscal Year 2026, which include spending on robotics, fulfillment services, and a stake in Deliveroo. Although the company posted strong Q3 results earlier this month, investors reacted negatively to the new spending plans and have since sent shares lower. Despite the drop, four-star Needham analyst Bernie McTernan sees this as a good buying opportunity, especially with 2025 expected to be a strong growth year for the company.
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McTernan noted that DoorDash is on track to double its gross order value within four years of the pandemic, thereby making the sharp decline in the stock price surprising. He estimates that the company can grow its adjusted EBITDA by more than 30% per year, with the Deliveroo acquisition and strong organic sales helping offset the impact of new spending. While the investments won’t immediately boost growth, McTernan believes they are essential for maintaining DoorDash’s current trajectory.
Although the investment amounts may seem large and their returns uncertain for now, McTernan trusts the current leadership based on its past performance. As a result, Needham reiterated its Buy rating on the stock but slightly lowered its price target to $275 per share due to the share price drop. This led to DoorDash shares jumping 6% in today’s trading.
Is DASH Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DASH stock based on 22 Buys, seven Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average DASH price target of $290 per share implies 40% upside potential.
