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On Wednesday, Macquarie raised its price target on Instacart shares (NASDAQ:CART) to $55 from $52, while maintaining an Outperform rating. According to InvestingPro data, analyst targets for the stock range from $37 to $60, with the company currently trading near $49. The revision follows Instacart’s latest earnings report, which showed the company’s revenue increased by 10% to $883 million, narrowly missing the forecast consensus of $889 million.
Instacart’s fourth quarter adjusted EBITDA reached $252 million, a 29% margin, surpassing the expected $237 million. The first quarter EBITDA guidance for 2025 was set at $225 million, slightly below the Street’s anticipation of $237 million. The company maintains impressive financial health, with InvestingPro analysis showing a robust gross profit margin of 75.38% and strong cash flow generation. Despite these figures, Macquarie analyst Ross Compton highlighted the company’s strong bargaining power with grocers, now totaling approximately 1,800 partners, as a key factor in Instacart’s ongoing success as a grocery marketplace.
The analyst pointed out that the increased adoption of price parity among retail partners is a testament to Instacart’s influence. About 600 of the 1800 retailers have integrated Instacart’s Enterprise technology tools, with the number of new retailers doubling in 2024 compared to the previous year. Additionally, 220 retailers are now utilizing Instacart’s Carrot Ads technology to monetize their retail media networks. InvestingPro subscribers can access detailed analysis of Instacart’s growth metrics and 13 additional ProTips, including insights on the company’s profitability outlook and shareholder returns.
Macquarie views Instacart’s strategy to offer free delivery for lower basket sizes as a positive step towards fostering growth and customer adoption of digital grocery delivery. The company’s decision to lower the free delivery threshold to just $10 is seen as a move to encourage customers to make it a habit, leveraging its market leadership and dense network to support these smaller transactions economically. With a current ratio of 3.06 and minimal debt, Instacart maintains the financial flexibility to pursue such growth initiatives.
In other recent news, Instacart reported impressive financial results for Q4 2024, with earnings per share reaching $0.53, significantly surpassing the forecasted $0.25. The company’s revenue for the quarter was $883 million, exceeding expectations of $867.88 million. Despite these strong earnings, the stock experienced a decline, reflecting potential investor concerns. Following the earnings report, several analyst firms adjusted their price targets for Instacart. Mizuho (NYSE:MFG) Securities lowered its target to $52 while maintaining an Outperform rating, citing strong Gross Transaction (JO:TCPJ) Volume (GTV) but modest EBITDA expectations due to ongoing investments. Goldman Sachs also revised its price target to $56, maintaining a Buy rating, and noted the company’s strategic investments to enhance online grocery adoption. JPMorgan adjusted its price target to $50, maintaining an Overweight rating, while emphasizing the positive long-term growth potential despite short-term margin concerns. Conversely, JMP Securities raised its price target to $55, expressing confidence in Instacart’s growth strategy and potential to capture a larger share of advertising budgets. These developments highlight the mixed analyst sentiment amid Instacart’s ongoing strategic investments and financial performance.
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