Instacart’s stock made its debut in September.
Photo by Vanja Savic
Instacart
‘s beaten-down stock is winning favor among Wall Street analysts.
On Monday,
J.P. Morgan
‘s Doug Anmuth rated the grocery-delivery stock at Overweight, the equivalent of Buy. Instacart’s stock (ticker: CART) is trading at an attractive price and should rise further as the online grocery industry picks up pace, he wrote in a research note.
Online grocery sales will account for more than 25% of total grocery spending in eight to 10 years, compared with roughly 12% last year, Anmuth wrote. “And Instacart is well positioned as the market leader to play a key role in this shift & capture incremental share,” he said.
Shares of Instacart gained 1.4% at the open, but then dropped back for a loss of more than 2% to $25.02. J.P. Morgan expects the stock to hit $33 by December next year.
The company now has an enterprise value of six times J.P. Morgan’s forecast for its adjusted 2025 earnings before interest, taxes, depreciation, and amortization, Anmuth wrote. That is an approximately 32% discount to the average valuation of competitors like
Uber Technologies
(UBER) and
DoorDash
(DASH), he said.
“Valuation is attractive,” Anmuth wrote.
Last month, Instacart listed its stock via a highly anticipated intiail public offering but has fallen since then. It is down 13% from its IPO price and off 23% from the closing level on the first day of trading. At least five analysts, including from Gordon Haskett and Bernstein, have rated the shares at Neutral or the equivalent, citing competition and concerns about discretionary spending in the near term.
Anmuth acknowledged those concerns but said he feels reassured by Instacart’s first-mover advantage in the grocery delivery business.
The San-Francisco based company’s stock also received a Buy call from Citi’s Ronald Josey and his analyst team on Monday. Josey has a $34 target for price and also finds the valuation “compelling.”
An
Oppenheimer
note on Saturday rated Instacart at Outperform with a $36 target for the price. Analyst Jason Helfstein calculated the company’s valuation at a 46% discount to its peers and said he expects profits to grow.
Write to Karishma Vanjani at [email protected].
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