Bernstein analysts made a tactical upgrade on Instacart (NASDAQ:CART) stock from Market Perform to Outperform and lifted the target price to $43 from $30.
The move came following the delivery company’s Q4 print which offered “a more favorable view of the stock as we see room for Gross Transaction Value (“GTV”) growth to exceed consensus expectations,” the analysts wrote.
“CART is lapping the impact of EBT SNAP headwinds and the drag from its 2020/21 COVID cohorts is abating. Q1 guidance implies HSD to LDD GTV growth is feasible near-term, yet consensus has written off the possibility of >10%. “
The analysts noted that the current market consensus is projecting CART to maintain a GTV growth rate of 5-6% for the foreseeable future.
However, they believe that guidance provided in the second or third quarter could serve as a catalyst for positive revisions to GTV expectations.
With the stock currently valued at 10 times adjusted EBITDA, such an adjustment is seen as sufficient for the stock “to re-rate higher.”