Needham upgrades Instacart to Buy, adds to Conviction List

Needham upgraded Instacart (CART) to Buy from Hold with a $56 price target The analyst also added the shares to the firm’s Conviction List. The stronger than expected results in 2024 suggest fears over competition and total addressable market pull forward are overblown, likely driven by Instacart’s leading customer experience in grocery, which it continues to improve, the analyst tells investors in a research note. Needham’s cohort analysis suggests COVID cohorts are stable and post-COVID cohorts stacking on top of each other are large enough to drive consolidated volume growth. As a result, in its bull case, the firm thinks Instacart can grow transaction volume in the low-teens over the next two years resulting in a 30% annual adjusted EBITDA growth. The risk/reward in the shares is compelling with an $80 bull case and floor that should be supported by the potential to benefit from acquisitions, contends Needham.