New Instacart Stock Buy on Mizuho, ​​Stocks Rise By Investing.com

Investing.com – Mizuho (NYSE:) Securities launched research coverage on Instacart stock on Monday, setting an outperform rating and a $55 price target.

“We believe Instacart’s leadership position in grocery delivery is underappreciated,” analysts led by James Lee said in a note.

Instacart (NASDAQ:) shares rose 1.5% in pre-market trading on Tuesday.

Mizuho analysts believe competitive concerns surrounding Instacart are overblown, given the company’s deep technology integration with grocery stores, which includes inventory management and a specialized delivery workforce. They argue that this integration results in a superior user experience that is difficult for competitors to replicate.

Mizuho praises Instacart’s strategy of investing for growth in a market with a total addressable market (TAM) of $1.2 trillion and a penetration of only about 5% for delivery services.

Instacart’s initiatives to reduce grocery costs have driven double-digit gross transaction value (GTV) growth year-to-date in 2024. Additionally, the integration of loyalty programs and dynamic pricing solutions are expected to make grocery prices more affordable for consumers.

The report also emphasized the role of advertising in funding Instacart’s growth investments, with the expectation that it will also push EBITDA higher over time.

Analysts at Mizuho believe the long-term consensus EBITDA outlook for the company is conservative, and expect that every 1% increase in the take rate could lead to an EBITDA increase of more than 20%. This perspective is supported by their estimate that Instacart’s fiscal 2027 EBITDA will be about 15% higher than Street forecasts.

In terms of valuation, Mizuho says Instacart stock is attractively priced at 9 times fiscal 2026 EV/EBITDA, a discount to an estimated revenue compound annual growth rate (CAGR) of more than 10%.

The analysts continued: “We believe the stock should trade at its growth rate as competitive concerns subside.”

The $55 target price set by Mizuho reflects an 11x expected fiscal 2026 EBITDA multiple, in line with the company’s expected growth trajectory.

Elsewhere, analysts at BTIG also upgraded their rating to buy from neutral, citing strong order growth estimates and a valuation that is “not particularly challenging”.

“With the maturity across much of consumer-facing online, we were looking for increased exposure to pockets of secular growth and grocery delivery fits the bill,” the analysts wrote in a note to clients. “Our tracking indicates accelerating demand growth, and we take Q4 and 2025 estimates higher than the Street. Finally, with estimates rising and inventory declining since Q3 was printed, we see the valuation as attractive and are finally pulling the trigger.”

Instacart stock currently carries 15 buy ratings, 15 neutral ratings, and no sell ratings from Wall Street analysts.