DoorDash (DASH) has the potential to stabilize profitability with entry in new verticals and international markets, RBC Capital Markets said in a note Monday.
DoorDash’s new verticals and international segment may have peaked at losses of around $1.3 billion annually, RBC added. The firm expects that while the company’s core business investment may be minimal, new vertical losses are unlikely to increase year-over-year.
The investment firm said it previously underestimated the company’s order growth resilience primarily because of the frequency “which should continue to be a multi-year mid-to-high-teens grower.”
DoorDash’s potential partnerships, particularly with LYFT (LYFT), could drive significant incremental orders and enhance its loyalty program, according to the note.
The firm said consumer concerns and slow expansion into non-restaurant verticals remain a risk to the company’s growth with low likelihood and potential for upward estimate revisions.
RBC raised DoorDash’s stock rating to outperform from sector perform and increased the price target to $175 from $130.