Government-imposed lockdowns crushed the U.S. economy last year, and to a degree some of the fallout is still lingering. This was especially true for the so-called gig economy, as many ride-sharing apps and delivery apps were forced to back off while everything was sorted out. Yet, with the economy making its comeback, the gig economy is kicking into gear too.
Gordon Haskett looked at three major firms within the industry that focus on ride-hailing and delivery. While stocks of each are substantially higher than they were last year, questions remain about where they stand to go from here.
The underlying thesis for these firms seems to be convenience. As more consumers are working from home, delivery services have become increasingly important. While the pandemic put a damper on the ride-hailing trend, this seems to be squarely in the rearview mirror, as safety protocols have been instituted to keep riders and drivers safe.
24/7 Wall St. has taken a close look at the report and picked out some of the highlights that investors can use to make informed choices on these stocks. Also, look out for Uber and Lyft to report earnings later this week.
Note that Gordon Haskett publishes differentiated, independent research to a targeted group of institutional investors. The company provides analysts with intellectual autonomy, sector-specific senior salespeople, infrastructure and support.
DoorDash Inc. (NYSE: DASH) was the first big name on the list. Gordon Haskett initiated coverage with a Buy rating and a $206 price target that implies upside of 18% from the most recent closing price of $174.29.
The analyst goes into further detail, saying that it views DoorDash as more than just a COVID-19 play. In fact, Gordon Haskett sees it as a long-term play on secular change toward convenience and a topline upward revision story in the marking with the potential for adjacent delivery verticals and rapid international expansion.
Monday morning, the stock traded down nearly 2% to $171.31, in a post-IPO range of $110.13 to $256.09. The consensus price target is $175.47. Shares are up 22% year to date, with most of the gain coming in the past quarter.
Uber Technologies Inc. (NYSE: UBER) has performed the weakest out of the group, with its share price down about 15% year to date, though it is still up roughly 44% from this time last year. Despite this, Uber was initiated with a Buy rating and a $65 price target. That suggests upside of roughly 50% from the most recent closing price of $43.46.
Gordon Haskett views Uber as a company that will further engrain itself in the everyday lives of consumers. Ultimately, this could lead to share gains across both ride shares and delivery, resulting in upward top-line and bottom-line revisions in the years to come. In the near term, Uber offers investors exposure to the reopening trade and defense against a prolonged COVID-19 backdrop in the form of its delivery service. Again, Gordon Haskett is playing on the convenience trade and sees Uber as well positioned to benefit from this structural shift.
Uber stock traded up 1% to $43.97, and it has a consensus price target of $69.11. The stock has a 52-week trading range of $28.48 to $64.05.
Lyft Inc. (NASDAQ: LYFT) has been the best-performed stock of this group over the past year, and Gordon Haskett sees this ride-hailing firm pumping the breaks. Note that Lyft stock is up nearly 13% year to date, and it is a whopping 88% higher in the past 52 weeks. The analyst started coverage with a Hold rating and a $59 price target, which would be upside of about 7% from the most recent close at $55.32.
The ongoing debate over Lyft has been whether it can compete with much larger rival Uber. Yet, Lyft has proven resilient, along with proving the bears wrong by increasing its share in the U.S. market. However, Gordon Haskett sees Lyft as disadvantaged in the coming quarters relative to Uber, as the bigger, badder firm will be taking back some of this market share. The analyst views this as a function of Lyft’s singular product focus, while Uber is diversifying into delivery, essentially building a “super app” that could drive further share gains.
Lyft shares traded up about 2% to $56.36, in a 52-week range of $21.34 to $68.28. Analysts have a consensus price target of $69.34.