DoorDash Biker
DoorDash Biker

DoorDash has a growing opportunity in the non-restaurant delivery business that could push the stock up more than 20%, according to Bank of America.

On Thursday a team of analysts led by Michael McGovern bumped their DoorDash coverage to a "buy" rating, and upgraded their price target to a street high of $255, from $190, representing a gain of 21% from Wednesday's closing price.

Shares of DoorDash gained as much as 7.4% Thursday afternoon.

The analysts noted that DoorDash will benefit from an oncoming "rapid shift of local commerce to delivery" via Mobile apps. DoorDash began as a restaurant delivery app, but BofA expects the mobile app to expand into grocery, alcohol, and convenience items within the next five years. Ultimately, the firm sees DoorDash expanding into non-food delivery items as well.

"We believe DoorDash continues to take market share in the US restaurant delivery industry, and based on our revised estimates, we have DoorDash getting to 55% share by 2026 (including non-food GMV, gross merchandise value," said the analysts.

BofA also noted that DoorDash has 58% share in suburbs and has built a first-mover advantage in a lot of suburban markets. Meanwhile, 26% of DoorDash users are DashPass subscribers, which could help with market share gains going forward especially as DoorDash has the largest subscriber base in the industry, BofA said.

DoorDash's IPO in December was one of the largest offerings of 2020. The company has gained 16% since the close on its first day of public trading.

Read the original article on Business Insider