On Wednesday, Just Eat Takeaway.com NV (TKWY:NA) (NASDAQ: GRUB) stock, a leading global online food delivery marketplace, received a Hold rating from Stifel, a financial services company. The firm set a price target for the company's shares at £14.80.
The rating is based on the company's comparatively lower growth rates relative to its peers and the absence of catalysts that could potentially reduce the valuation gap with the industry.
The firm acknowledged Just Eat's dominant positions in several lucrative markets, including Germany, Switzerland, and the Netherlands. This strong market presence has resulted in the company achieving nearly 5% adjusted EBITDA margins of Gross Transaction Value (GTV) in its Northern Europe segment, which is considered best in class.
Stifel highlighted the company's investments in a unified IT infrastructure, its proprietary delivery fleet, and the expansion into new verticals. These strategic moves are anticipated to gradually bolster profitability in the UK market. Just Eat continues to retain its market leadership in the UK, despite intense competition from rivals such as Deliveroo (OTC:DROOF) and Uber (NYSE:UBER) Eats.
The analyst's comments suggest that while Just Eat Takeaway.com NV has solidified its position in key markets and is expected to see an upturn in UK profitability, the current growth trajectory and market conditions do not warrant an upgrade in the rating at this time. The Hold rating reflects a neutral stance, indicating that the firm does not foresee significant stock movement in the near term.
In other recent news, Just Eat Takeaway.com NV has been the subject of analyst upgrades from Morgan Stanley and JPMorgan. Morgan Stanley has raised its rating to Overweight from Equalweight and increased the price target to GBP12.90 from GBP12.00.
They highlighted recent operational improvements in Just Eat Takeaway's core markets and anticipate that negative effects associated with the company's US subsidiary, Grubhub, could diminish.
JPMorgan also shifted its stance on Just Eat Takeaway, upgrading it from a Neutral to an Overweight rating and increasing the price target to GBP 13.96. The firm cited improved cash flow management and a shift towards profitability. JPMorgan's analysis suggests that Just Eat Takeaway should be valued similarly to pubs and restaurants due to its resilient cash flows.
These recent developments come as Redburn-Atlantic has initiated a sell rating on Just Eat Takeaway.com NV stock, citing concerns about Just Eat's market position and questioning the scope for growth in profitability. Despite this, both Morgan Stanley and JPMorgan's positive reassessments could signal a turning point for the company in the food delivery industry.
InvestingPro Insights
To complement Stifel's analysis of Just Eat Takeaway.com NV (GRUB), InvestingPro data provides additional context for investors. According to InvestingPro Tips, GRUB generally trades with low price volatility, which aligns with Stifel's Hold rating and the absence of expected significant stock movement in the near term.
However, investors should note that GRUB suffers from weak gross profit margins, which could impact the company's ability to improve profitability, especially in competitive markets like the UK. This weakness in margins may explain why the company's valuation implies a poor free cash flow yield, as highlighted by another InvestingPro Tip.
On a positive note, analysts predict that the company will be profitable this year, which could potentially support the gradual improvement in UK profitability mentioned in Stifel's analysis. It's worth noting that GRUB does not pay a dividend to shareholders, focusing instead on reinvestment and growth strategies.
For a more comprehensive analysis, InvestingPro offers additional tips and insights that could further inform investment decisions regarding GRUB. Investors looking for a deeper dive into the company's financials and market position may find value in exploring the full range of InvestingPro Tips available.
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