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On Tuesday, BofA Securities analyst Justin Post adjusted the price target for Instacart stock (NASDAQ:CART) to $53.00, up from the previous $51.00, while continuing to hold a Neutral stance on the company’s shares. According to InvestingPro data, the stock currently trades at $49.36, with analyst targets ranging from $37 to $65, reflecting the market’s mixed sentiment. The company maintains a "GREAT" financial health score of 3.51, supported by impressive gross profit margins of 75.38%. Post’s commentary highlighted that Instacart’s upcoming report, scheduled for February 25th, is expected to reveal Gross Transaction (JO:TCPJ) Value (GTV), revenue, and EBITDA figures of $8.64 billion, $886 million, and $239 million, respectively. These projections are largely consistent with Wall Street’s expectations, which are set at $8.61 billion for GTV, $891 million for revenue, and $240 million for EBITDA. The company has demonstrated solid revenue growth of 10.08% over the last twelve months, maintaining strong operational efficiency.
The analyst pointed out that the market is anticipating a year-over-year GTV growth of 9%, which represents a 2 percentage point deceleration compared to the third quarter. This slowdown is thought to result from the company cycling through a robust holiday season and elevated incentives during the fourth quarter of 2023. Despite this, the partnership with Uber (NYSE:UBER) is deemed to have been successful, and a strong consumer base may lead to modest outperformance in the fourth quarter.
Instacart’s marketing and sales expenses are expected to have increased year-over-year in the fourth quarter, as competitors like Uber have increased their marketing investments to attract subscribers. Nevertheless, Post believes there is some leeway in the overall expense estimates for the company. The fourth quarter EBITDA is likely to be around $250 million, considering Instacart’s history of surpassing expectations.
Investors will be looking closely at Instacart’s financial performance, particularly in light of the competitive landscape and the strategic moves the company has made, such as its partnership with Uber. The raised price target reflects a cautiously optimistic view of the company’s ability to maintain its market position and financial health amid these dynamics. InvestingPro analysis suggests the stock is slightly overvalued at current levels, with additional insights available through the comprehensive Pro Research Report, which offers deep-dive analysis of Instacart among 1,400+ top US stocks.
In other recent news, Instacart is preparing to release its fourth-quarter earnings report, with analysts closely watching the company’s performance. Oppenheimer has raised its price target for Instacart to $65, maintaining an Outperform rating, based on optimistic expectations for the company’s Gross Transaction Value (GTV) growth, which is projected to exceed Wall Street estimates. Seaport Global Securities initiated coverage with a Buy rating and a $62 price target, citing the significant market potential for online groceries and Instacart’s leading position in the sector. Meanwhile, Bernstein analysts have increased their price target to $55, reflecting confidence in Instacart’s transaction take rate and effective expense management.
Mizuho (NYSE:MFG) Securities also initiated coverage with an Outperform rating and a $55 price target, highlighting Instacart’s advanced technology integration and strategic investments to stimulate growth. The firm anticipates that advertising revenue will bolster Instacart’s growth investments, contributing to a rise in EBITDA over time. Benchmark has maintained a Hold rating ahead of the earnings report, noting potential challenges such as low subscriber penetration and competitive pressures. The forthcoming earnings report is expected to provide further insight into Instacart’s strategies and market position.
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