UBS has hiked its valuation on Just Eat (LON:JE), arguing that the company is well positioned to benefit from demographic trends, Proactive Investors reports. The comments are a boost for the blue-chip delivery group, whose shares came under pressure last week after rival Deliveroo signalled that it would allow restaurants to use their own drivers for delivery, and that it was adding 5,000 new restaurants to its platform.
Just Eat’s share price rose in the previous session, adding 2.49 percent to 806.60p, and outperforming the broader UK market, with the benchmark FTSE 100 index shedding 0.36 percent to 7,603.85p. The group’s shares have added a little less than 23 percent to their value over the past year, as compared with about a one-percent gain in the Footsie.
UBS lifts valuation on Just Eat
UBS hiked its price target on Just Eat from 915p to 1,040p yesterday, as it forecast strong growth trends in the online food delivery market. Proactive Investors quoted the analysts as elaborating that the FTSE 100 takeaway delivery company was ‘well positioned to benefit’ from strong demographic trends, greater choice, increased logistics scale, and eventual automation in the food delivery market, which they forecast could grow to $365 billion by 2030 from $35 billion today.
Market ‘overly cautious’
The analysts further argue that the market is ‘overly cautious’ to the group’s delivery services and was underappreciating the incremental revenue opportunity. UBS further commented that Just Eat had strong momentum in key markets such as the UK, Canada, Italy, and Brazil in contrast to rivals UberEATs and Deliveroo whose “strong share gains of 2016/17 (in terms of app downloads) seem to have stalled or reversed in most markets”.
The comments came after Liberum reaffirmed the FTSE 100 group as a ‘buy,’ arguing that the fall in Just Eat’s share price was overdone.