Needham analysts upgraded Instacart (NASDAQ:CART) from Hold to Buy, adding the stock to the Needham Conviction List with a price target of $56.00. The decision reflects growing confidence in Instacart’s ability to maintain its market leadership and deliver sustainable growth, dispelling prior concerns over competition and market saturation.
Instacart’s stronger-than-expected performance in 2024 indicates that fears of competitive pressures and a plateauing total addressable market were overstated. The company’s superior customer experience in the grocery delivery segment, bolstered by ongoing enhancements, continues to attract and retain users. An analysis of customer cohorts reveals stability among those acquired during the COVID-19 pandemic, while newer cohorts added post-pandemic are sufficiently large to drive overall gross transaction value (GTV) growth.
Looking ahead, the analysts believe that Instacart is poised to achieve low-teens GTV growth over the next two years under a bullish scenario, which could result in a 30% compound annual growth rate (CAGR) in adjusted EBITDA. With these factors in play, the company presents a compelling risk-reward profile.