Uber and DoorDash Are the Leaders in Ride-Hailing and Delivery. Buy the Stocks, Says Analyst.

Mizuho Securities initiates coverage on shares of DoorDash and Uber with Outperform ratings. (Dreamstime)

Key Points

• Mizuho initiates coverage on DoorDash and Uber with Outperform ratings, projecting over 30% growth for both stocks.
• DoorDash is Mizuho’s top pick, with a price target of $350, citing strong customer growth and new revenue streams.
• Uber’s profit margin before interest and taxes is estimated to rise to 15.5% in 2027.

Food delivery and ride-hailing, the two pillars of the gig economy, have reached a stage of stable growth, according to Mizuho Securities. That’s good news for industry leaders DoorDash and Uber Technologies .

Mizuho initiated coverage of the duo with Outperform ratings in a research note, arguing both stocks can grow more than 30% over the next 12 months.

“We believe both ride hailing and food delivery have passed the ‘land grabbing’ phase with relatively stable market shares among players,” wrote analyst Lloyd Walmsley.

DoorDash is the firm’s top pick in the space. The company is seeing both strong growth from existing customers and a healthy uptick in new users, Mizuho said. Like others in the category, it also has space to scale up newer revenue streams like its advertising business and grocery delivery.

Mizuho assigned the stock a price target of $350. DoorDash shares fell 0.4% to $271.55 on Tuesday.

Uber was a close second choice. The ride-hailing giant’s profit margin before interest and taxes was underwater in 2021, but climbed to 6% in 2024 and an estimated 15.5% in 2027, Mizuho noted. At the same time, the company looks set to deliver capital back to shareholders, having authorized a $20 billion stock buyback in August.

The firm sees 32% growth for Uber stock over the next year, giving it a price target of $130. The stock was down 1.9% to $97.68 on Tuesday.

Other taxi and delivery names like Lyft and Instacart operator Maplebear aren’t bad choices, Mizuho argued, but they don’t have the same upside.

Instacart faces intense competition from Uber, DoorDash, and Amazon.com’s expanded grocery delivery service. Lyft’s expansion into Europe through the acquisition of German rival Freenow, meanwhile, carries risks due to its weak competitive position in many European markets, Mizuho argued.

The firm assigned Neutral ratings to Lyft and Maplebear with price targets of $24 and $45, respectively. Lyft fell 2.6% to $22.34 on Tuesday, while Maplebear was slumping 6% to $35.66.

Write to Nate Wolf at nate.wolf@barrons.com