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On Wednesday, Instacart (NASDAQ:CART) received a vote of confidence from Cantor Fitzgerald as the firm reiterated its Overweight rating and $55.00 price target on the company’s shares. The endorsement came after Instacart reported its fourth-quarter results, which saw the company’s Gross Transaction (JO:TCPJ) Value (GTV) meet expectations and EBITDA surpass the high-end of its previous guidance by 5%. According to InvestingPro data, the company maintains impressive gross profit margins of 75.4% and has earned a "GREAT" financial health score of 3.34 out of 5.
Instacart’s advertising revenues experienced a year-over-year increase of 10%, aligning with GTV growth and mirroring the 11% year-over-year increase seen in the third quarter. The company’s first-quarter GTV guidance exceeded projections by 2 percentage points. However, the EBITDA forecast was 3% below the high-end of prior Street estimates, as reported by Visible Alpha. This conservative stance on EBITDA is seen as typical for Instacart. InvestingPro analysis shows the company has strong fundamentals with more cash than debt on its balance sheet and a healthy current ratio of 3.06, indicating robust liquidity. Subscribers can access 12 additional ProTips and comprehensive financial metrics on the platform.
The company is on a steady course of operational improvements, focusing on enhancing affordability, achieving better shopper efficiencies, and expanding its selection to diversify the order mix. These efforts are expected to help Instacart sustain Gross Transaction Value growth in the high single digits to low double digits range over the coming quarters. The company’s operational efficiency is reflected in its strong return on invested capital of 10% and robust free cash flow yield of 6%.
Despite reporting a solid quarter, Instacart’s shares experienced a 9% decline in after-market trading, contrasting with a 0.40% rise in Nasdaq futures. Nevertheless, Cantor Fitzgerald’s analysts remain optimistic about Instacart’s prospects. They highlighted the stock’s attractive risk/reward profile, noting that it is trading at 10 times the firm’s estimated EBITDA for fiscal year 2026. The reiterated Overweight rating and $55 price target reflect the firm’s continued bullish outlook on Instacart’s stock. Based on InvestingPro Fair Value analysis, the stock appears slightly undervalued at current levels, with analyst targets ranging from $37 to $60 per share. Get access to the full Pro Research Report and detailed valuation metrics through an InvestingPro subscription.
In other recent news, Instacart’s latest earnings report revealed a 10% increase in revenue, reaching $883 million, though it slightly missed the forecast consensus of $889 million. The company’s fourth-quarter adjusted EBITDA stood at $252 million, surpassing expectations, while the first-quarter EBITDA guidance for 2025 came in slightly below street expectations. Analysts have varied in their assessments, with Macquarie raising its price target to $55, citing Instacart’s strong partnerships and strategic moves such as offering free delivery for smaller basket sizes. Conversely, Mizuho (NYSE:MFG) adjusted its target to $52 due to tempered EBITDA expectations, though it remains optimistic about long-term profitability.
Goldman Sachs lowered its price target to $56 but maintained a Buy rating, highlighting strong Gross Transaction Value (GTV) growth and initiatives to boost online grocery shopping. Meanwhile, JPMorgan decreased its target to $50, noting the impact of investments on transaction take rates and marketing expenses, but remains positive about revenue expansion. JMP Securities increased its target to $55, focusing on Instacart’s stable customer growth and potential in the Consumer Packaged Goods advertising sector. These developments reflect a mix of optimism and caution among analysts regarding Instacart’s financial trajectory and strategic initiatives.
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