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On Wednesday, JMP Securities analyst Andrew Boone increased the price target for Instacart stock (NASDAQ: NASDAQ:CART) to $55 from the previous $51 while reiterating a Market Outperform rating. The adjustment followed Instacart’s first quarter guidance for 2025, which showed Gross Transaction (JO:TCPJ) Value (GTV) slightly above the consensus but with EBITDA projections around 5% below what was expected by analysts. The company has demonstrated strong financial fundamentals, with impressive gross profit margins of 75.4% and an EBITDA of $433 million in the last twelve months.According to InvestingPro data, Instacart maintains excellent financial health with a score of 3.34 (GREAT), supported by robust liquidity metrics and operational efficiency. Subscribers can access 13 additional ProTips and comprehensive financial analysis in the Pro Research Report.
Boone addressed concerns that Instacart’s GTV growth of 8-10% for the first quarter of 2024 might be driven by an aggressive marketing strategy rather than organic growth. He countered this by highlighting the company’s report of stable existing customer cohorts with increased frequency and spending, as well as new user cohorts that surpass pre-pandemic levels. This growth trajectory is reflected in the company’s strong market performance, with the stock delivering a 55.4% return over the past year and a 17.8% gain year-to-date, suggesting investor confidence in the company’s expansion strategy.
The analyst also touched on the competitive landscape of digital grocery services, noting that despite the challenges, the over $1 trillion grocery market has room for multiple successful players. Boone expressed confidence in Instacart’s ability to leverage its scale for innovative solutions, such as providing alternatives when certain items are out of stock. The company’s competitive position is strengthened by its solid balance sheet, with more cash than debt and a healthy current ratio of 3.06, indicating strong operational flexibility.
Boone concluded by emphasizing the potential for Instacart to capture a larger share of Consumer Packaged Goods (CPG) advertising budgets. While Instacart trades at an EV/EBITDA multiple of 26.4x, detailed valuation analysis from InvestingPro suggests the stock is currently trading slightly above its Fair Value. He encouraged buying Instacart shares, especially if there are any market pullbacks. For comprehensive valuation insights and more detailed metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Instacart ( Maplebear Inc.) announced its Q4 2024 financial results, reporting earnings per share (EPS) of $0.53, which significantly exceeded the projected $0.25. The company’s revenue for the quarter was $883 million, surpassing the anticipated $867.88 million. Despite these positive financial outcomes, Instacart’s stock fell by 9.14% in aftermarket trading. The company also reported a GAAP net income of $148 million, a $13 million increase from the previous year, and an adjusted EBITDA of $252 million, marking a 27% rise year-over-year. Looking forward, Instacart has set a Q1 2025 guidance for gross transaction value between $9.0 and $9.15 billion, with an expected adjusted EBITDA of $220 million to $230 million. The company continues to focus on expanding its core business, enterprise solutions, and advertising, while targeting stock-based compensation under $425 million in 2025. Additionally, Instacart’s strategic investments and product offerings have led to a 10% year-over-year growth in gross transaction value and transaction revenue.
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