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Instacart stock experienced a significant jump in its trading debut, surging up to 43% in one of the year’s largest initial public offerings.
However, in the subsequent session, shares fell sharply as investors raised concerns about its growth prospects.
Analysts pointed to the company’s robust advertising business performance and its favorable risk-reward profile as it stands to benefit from the increasing online penetration of the U.S. grocery market.
14 analysts initiated research coverage on CART so far with 7 rating the stock as Buy or equivalent with the same number of analysts remaining on the sidelines.
Goldman Sachs analysts are the biggest bulls on the Street so far with a price target of $48 per share, indicating an upside potential of nearly 90%.
“We frame CART as positively exposed to two key secular growth themes in our coverage universe: 1) the potential for delivery platforms to enable the digital transition of the grocery industry as consumers increase their adoption of online channels and 2) the rise of retail media networks as an area of growth within the broader digital advertising industry that can continue to attract greater ad/promotion budgets over time,” the analysts wrote in a note.
Citi analysts initiated coverage at Buy, $34 PT.
While Instacart’s growth is slowing, the analysts note, they also believe that “ramping acquisition and incentive spend, Instacart’s L-T partner network and 600K shoppers should deliver accelerating growth.”
“With shares trading at ~6x our ‘25x EV/EBITDA, we believe risk/reward in shares is positive,” the analysts said.
On the other hand, BofA analysts initiated with a Neutral rating and a $30 per share price target.
“We look for catalysts to accelerate GTV growth toward sector levels to be more constructive.”
