Barclays ups Just Eat to 'overweight', sees strong revenue momentum
Shares in Just Eat were looking pretty tasty on Thursday after Barclays upped its stance on the stock to 'overweight' from 'equalweight' and hoisted up the price target to 1,000p from 700p.
The bank said it expects Just eat to have strong revenue momentum into the fourth quarter and FY18. It reckons revenues will surpass £710m in FY18, versus Bloomberg consensus of £656m, due to decent growth in the marketplace, the consolidation of Hungryhouse, expansion of logistics and the new 50p surcharge.
"We do expect that incoming CEO Peter Plumb will recycle some excess profit into logistics and marketing, but nonetheless see upside pressure on FY18 EBITDA expectations, with HungryHouse and the service charge adding circa £30m in 2018. A further 2018 catalyst will be Brazil, where JE owns 32% of a business which on an order basis is half the size of the UK. There is a consolidation opportunity in this market, as Delivery Hero sees Brazil as non-strategic."
Barclays said the inclusion of Hungryhouse is expected to add £30m in revenues and 11m orders on an annualised basis.
"At the time of the acquisition, management guided to an incremental EBITDA contribution of £12-15m, although we suspect there may be upside to this number as management retires the brand and extracts marketing cost from the acquired business," it added.
At 1305 GMT, the shares were up 3.3% to 792.64p.