Investing

The Analyst Floodgates Are Open for Blockbuster IPOs Airbnb and DoorDash

The quiet period is officially over for a few big-name stocks that came public in December and the floodgates are now open for analyst calls. The quiet period for initial public offerings (IPOs) exists so underwriters do not affect the price of a recently public stock with their ratings. However once the quiet period ends, Wall Street rains down these ratings.

Airbnb Inc. (NASDAQ: ABNB), PubMatic Inc. (NASDAQ: PUBM) and DoorDash Inc. (NYSE: DASH) all came public in the second week of December. Both Airbnb and DoorDash saw an incredible run on their first day of trading as their IPOs were very much oversubscribed. The flurry of analyst calls coming out now are only proving this.

Here 24/7 Wall St. looks at what analysts are saying about each of these companies after the quiet period has lifted. We have included a brief trading history as well.

Jefferies initiated Airbnb with a Buy rating and a $170 price target, implying upside of 16% from the most recent closing price of $146.80. The brokerage firm further detailed in the report:

Airbnb is a best-in-class asset with a powerful brand and solid organic growth. We view it as a key reopening play in travel and a core investment in growth tech portfolios. We believe ABNB will continue to take market share and return to profitability by ’22. At 16x ’22 net revenue, we think it is justified ABNB trades at a premium to innovative market leaders given margin potential and best fundamentals in travel.

Merrill Lynch took a different approach and initiated Airbnb with a Neutral rating and a $158 price objective. The firm justified its rating saying:

Airbnb has fundamentally changed travel, opening homes & opportunities for both guests and hosts. We are constructive on long-term opportunity given an established 2-sided marketplace, leadership in the AA category, and strong direct traffic that should drive high-margins. However, with the stock up 116% from the $68 IPO price (vs 1.2% for the S&P 500) and currently valued at a premium at 16x 2022 P/S, 21x P/Gross profit, and 153x 2022 EBITDA (vs. marketplace group averages at 8x, 16x & 61x, respectively), we don’t expect significant multiple expansion from here.

A few other analysts also initiated coverage on Airbnb:

  • Barclays with an Equal Weight rating and a $140 price target
  • Oppenheimer with a Market Perform rating
  • Deutsche Bank as a Hold with a $130 price target
  • D.A. Davidson with a Buy rating and a $172 price target
  • Credit Suisse at Neutral with a $156 price target
  • Canaccord Genuity with a Buy rating and a $175 target

Airbnb stock traded down about 3% at $142.36, in a post-IPO range of $121.50 to $174.97.

Jefferies initiated PubMatic with a Buy rating and a $38 price target, implying upside of 36% from the most recent close at $27.95. Jefferies expanded on its rating in the report:

We view PubMatic as an ad tech winner with multiple drivers including the shift to programmatic advertising, buyers consolidating spend around fewer supply-side players, and growth in new verticals like Connected TV. We believe PUBM can achieve 20%+ rev growth and 25%+ EBITDA margins in ’21 with CTV an upside call option. At 8.9x ’21 rev PUBM trades at a 39% discount to its closest peer despite better growth and profitability.

A few other analysts weighed in:

  • Raymond James with a Market Perform rating
  • JMP Securities at Outperform with a $34 price target
  • RBC with an Outperform rating and a $34 price target
  • KeyCorp as Overweight with a $36 price target
  • Oppenheimer with an Outperform rating

PubMatic stock was trading up less than 3% at $28.73, in a post-IPO range of $22.42 to $38.70.

Merrill Lynch initiated coverage of DoorDash with a Neutral rating and a $157 price objective, implying upside of 10% from the most recent closing price of $142.75. The firm further detailed:

DoorDash was founded in 2013 and has become the largest 3P delivery platform in the US, with 390k merchants, 1mn couriers & 18mn customers in September. DoorDash has built competitive advantages in retention through its DashPass subscription (5mn subs vs. Uber at 1mn+ for Eats Pass) and in restaurant selection (175 of the 200 largest US restaurant brands on the platform). DoorDash leads US delivery apps in MAU’s (29mn in Dec, +115% y/y), sessions per user (10 per month), and retention (per Sensor Tower).

Here’s how other analysts started DoorDash:

  • Oppenheimer with a Market Perform rating
  • Barclays at Equal Weight with a $145 price target
  • William Blair with an Outperform rating
  • Deutsche Bank with a Buy rating and a $185 target
  • JPMorgan as Neutral with a $160 price target
  • RBC with a Sector Perform rating and a $135 target

DoorDash stock was down over 1% at $140.20, and it has a post-IPO range of $135.38 to $195.50.