Instacart (Ticker: CART), the popular grocery-delivery service, saw its stock gain on Monday as Wall Street analysts expressed optimism and urged investors to buy. Notably, J.P. Morgan’s Doug Anmuth rated the stock as Overweight, equivalent to a Buy rating.
According to Anmuth’s research note, Instacart’s stock is currently trading at an attractive price and is expected to rise further as the online grocery industry continues to grow. He predicts that online grocery sales will account for more than 25% of total grocery spending in the next eight to 10 years, compared to approximately 12% last year. Anmuth believes that Instacart, as the market leader, is well positioned to capture a significant share of this expanding market.
Shares of Instacart saw a nearly 2% increase in premarket trading on Monday, reaching $26.04. J.P. Morgan has set a target price of $33 for the stock by December next year.
Anmuth also emphasized the attractive valuation of Instacart. The company’s current enterprise value is approximately six times J.P. Morgan’s forecast for its adjusted 2025 earnings before interest, taxes, depreciation, and amortization. This represents a roughly 32% discount compared to competitors like Uber Technologies (UBER) and DoorDash (DASH).
It’s worth noting that Instacart’s stock has faced challenges since its highly anticipated initial public offering last month. It is currently down 13% from its IPO price and 23% from its closing level on the first day of trading. Several analysts, including those from Gordon Haskett and Bernstein, have rated the shares as Neutral, citing competition and concerns about discretionary spending in the near term.
Despite these concerns, Anmuth expressed confidence in Instacart’s first-mover advantage in the grocery delivery business. He believes that the company’s strong positioning and market leadership will drive future growth and profitability.
In addition to J.P. Morgan, other analysts have also issued positive recommendations on Instacart’s stock. Citi’s Ronald Josey and his analyst team gave the stock a Buy rating with a target price of $34, citing the compelling valuation. Furthermore, Oppenheimer rated Instacart as Outperform, setting a target price of $36. Analyst Jason Helfstein highlighted the company’s discounted valuation compared to its peers and anticipated future profits.
Overall, analysts’ recommendations indicate growing confidence in Instacart’s future prospects and underscore the potential value for investors.