Social distancing drove a boom in the delivery business in 2020, and one analyst said Thursday that DoorDash Inc (DASH) will be one of the biggest long-term winners from the local delivery era.

The DoorDash Analyst: Bank of America analyst Justin Post upgraded DoorDash from Neutral to Buy and raised the price target from $190 to $255.

The DoorDash Takeaways: In the upgrade note, Post said he expects a post-pandemic drop-off in food delivery will be mitigated by the continued rise of non-food delivery, and DoorDash has secured numerous new partnerships to establish a leadership position in the local delivery market.

“From 2021 to 2026, we expect Online penetration of Grocery, Convenience, and Alcohol spending to increase from 8% in ’21 to 16%, and expect non-Food applicable retail to increase from 2% to 10%,” the analyst said. 

DoorDash shares may seem expensive trading at more than 11 times 2023 sales estimates, he said. Yet Post said DoorDash could reach $15 billion in annual revenue by 2026, a roughly 26% compound annual growth rate.

DoorDash and competitor Uber Technologies Inc (UBER) have already grown non-restaurant orders to more than 5% of their total delivery bookings, the analyst said. 

He estimates the grocery, convenience, and alcohol delivery market is only about 8% penetrated, leaving plenty of room for long-term growth in a roughly $1-trillion total addressable market.

In addition to delivery platforms such as DoorDash and Uber, Post said large national restaurant chains will be winners from the delivery boom. He said these chains will be better positioned to partner with delivery platforms on more favorable terms than independent businesses.

In addition to the Buy rating for DoorDash, Bank of America has a Buy rating and $64 price target for Uber and a Buy rating, and a $33 price target for Just Eat Takeaway.com NV – ADR.

Benzinga’s Take: DoorDash is a pure-play on delivery, which may be pressured in the near term as the economy reopens. Uber has both a large delivery business and a large mobility business, which makes it more of a potential economic recovery play.