On Friday, JPMorgan analyst Marcus Diebel increased the price target on Delivery Hero stock to €50.00, up from €48.00, while maintaining an Overweight rating. The revision follows Delivery Hero's recent Q4 trading update, which revealed a stronger-than-expected performance.
The Q4 report, released Thursday, highlighted a 4% beat in Gross Merchandise Value (GMV) and a 5% beat in second-half EBITDA (earnings before interest, taxes, depreciation, and amortization) compared to market forecasts. Delivery Hero's market share in Saudi Arabia remained stable, with a notable average order growth of 28% in December.
In addition to Delivery Hero's achievements, Talabat, a food delivery service operating in the UAE and covered by Elena Jouranova, also exceeded expectations with a 26% growth in Q4 GMV. This indicates a broader positive trend within the food delivery sector.
Diebel emphasized Delivery Hero's robust business model and its advantageous position within the food delivery industry. The company's improving free cash flow (FCF) metrics and a balance sheet that could potentially reach a net cash balance by the end of 2026E were also highlighted as key factors. This financial stability may allow the company to repay outstanding convertible bonds earlier than expected, which is likely to draw the attention of long-only investors.
The analyst's comments also pointed out the attractive valuation of Delivery Hero, noting that operations excluding the company's 80% stake in Talabat are currently valued at almost nil. This valuation aspect, along with the strong financial performance and strategic positioning, underpins the analyst's continued bullish outlook on the stock.
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