Instacart shares positioned to Outperform with room for upside in 2025

On Tuesday, Bernstein analysts demonstrated a positive stance on Instacart (NASDAQ:CART) shares, raising the price target from $52.00 to $55.00 while maintaining an Outperform rating. The revision reflects a more optimistic growth outlook for the on-demand grocery delivery company, which has demonstrated impressive financial health with a 75.38% gross profit margin and 10.08% revenue growth in the last twelve months. According to InvestingPro analysis, the company maintains a GREAT overall financial health score.

The analysts highlighted Instacart as a "value play" within the on-demand service market, citing potential for the company to outperform expectations. They pointed to the expanding grocery eCommerce sector and the time-consuming nature of merchant sales cycles as factors that mitigate the immediate competitive threat from rivals like Uber (NYSE:UBER) and DoorDash (NASDAQ:DASH).

With a strong current ratio of 3.06 and minimal debt, the company appears well-positioned to execute its growth strategy.

The increased price target is based on a 1% raise in Gross Transaction (JO:TCPJ) Volume (GTV) projections and an improved EBITDA forecast, which is expected to rise by 5-10%. This adjustment stems from greater confidence in Instacart's transaction take rate due to shopper efficiencies and forthcoming changes to Instacart+ benefits, as well as effective expense management by the company.

According to Bernstein analysts, these factors have led to an upward revision in the Discounted Cash Flow (DCF) analysis, resulting in the elevated price target. They also noted that their GTV and adjusted EBITDA estimates for 2025 are 2% and 5% higher, respectively, than the consensus.

In other recent news, Instacart has been the subject of significant financial developments. The company reported a robust revenue growth of 10.08%, and analysts from Wells Fargo (NYSE:WFC) anticipate earnings to reach $982 million in FY25 and $1,105 million in FY26. The company's stock rating has been upgraded to 'Buy' by Needham and set at 'Equal Weight' by Wells Fargo.

In terms of strategic growth, Instacart has formed partnerships with Ulta Beauty (NASDAQ:ULTA) for same-day delivery and with POS giants for smart cart rollout. These alliances are aimed at enhancing retail experiences and supporting independent grocers.

Mizuho (NYSE:MFG) Securities initiated coverage on Instacart shares with an Outperform rating and a price target of $55, suggesting that the market has not fully recognized the company's leading position in the grocery delivery sector. The firm's valuation is based on an 11 times multiple of the company's projected fiscal year 2026 EBITDA.

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