DoorDash Inc (NYSE:DASH) has been upgraded by Jefferies analysts to a ‘Buy’ rating from their earlier ‘Hold’ rating, citing what they described as a constructive reset of expectations and improving fundamentals in the company’s core US restaurant delivery business.
The firm also upped its price target on DoorDash to $260 from $220, implying upside from current levels of about $202.
“We believe DASH's 2026 outlook helped lower expectations, providing flexibility for both long-term investments and upside to consensus,” they wrote.
They added that faster growth in US restaurant delivery over the past four quarters has made them “more bullish on the growth runway for DASH's most profitable business.”
With the stock down about 20% in the past 30 days, the analysts wrote that DoorDash’s “strong execution and growth algorithm now appear underappreciated.”
Jefferies noted that DoorDash outlined plans for “several hundred million dollars” of incremental investment in 2026, which they said is expected to result in only “slight margin expansion at DASH's legacy business.”
The analysts wrote that this implies at least $3.5 billion in 2026 EBITDA, including $200 million from return on orders (ROO), a moderation from prior investor expectations of $4 billion to $4.5 billion, while consensus estimates have also been lowered from $3.9 billion to $3.65 billion.
They added that growth in advertising revenue “provides an underappreciated tailwind, allowing DASH to deliver margin expansion despite more investment.”
The analysts pointed out that order value growth in US restaurant delivery accelerated to a three-year high in Q3, attributed to “adoption of DashPass and improved selection/quality drove higher cohort engagement.”
They added that increased spend among older cohorts shows “increasingly habituated usage that supports still-early penetration for delivery apps, which today make up just 13% of off-premise restaurant sales (versus 23% ecommerce average).”
Despite holding about 65% of US delivery app share, the analysts noted that DoorDash is used by only about 15% of adults and accounts for less than 6% of meals among active users, prompting Jefferies to raise its long-term growth estimates for the segment.
Jefferies factored in an additional $300 million of spending in its financial model and expects DoorDash’s fiscal year 2026 and 2027 EBITDA to be roughly 5% and 8% above consensus estimates, respectively.
This implies a peer-leading three-year EBITDA growth rate of about 35% from 2025 to 2028.
The analysts wrote that the main reason for margin expansion is faster growth in high-margin advertising revenue, which “alone offsets ~$200 million worth of incremental investments in 2026.”
The rest of the gains come from efficiency improvements and fixed-cost leverage in the US restaurant delivery business.