DoorDash can jump 32% given its market leadership in food delivery, Bernstein says

DoorDash is a top pick among U.S. emerging internet companies given its leadership in the on-demand delivery space, according to Bernstein. Analyst Nikhil Devnani in a Monday note initiated coverage of DoorDash with an outperform rating and a price target of $90 per share. That represents more than 32% upside from where shares closed on Monday. The analyst also initiated Etsy at outperform. “DoorDash is our top pick,” Devnani wrote. “We are bullish on the long-term growth potential of on-demand delivery and DoorDash is our favorite way to play the space — it’s the market leader, with a best-in-class management team, and industry leading unit economics.” Bernstein believes the company has ambitions to power local commerce beyond restaurant delivery. They approved of the company’s strong leadership and capital allocation history, as well as its “clean” first quarter earnings report. DoorDash’s reinvestments in its business may alarm some investors, but Devnani said he is comfortable dealing with lower margins in the near-term. “In fact, with these margins, we’re of the opinion that DoorDash should keep reinvesting for the long-term, further solidifying its market leadership position,” the analyst wrote. Shares of DoorDash dropped 3% in Tuesday premarket trading. –CNBC’s Michael Bloom contributed to this report.