Shares in Just Eat (LON:JE) have jumped in London this morning, as Liberum repeated its bullish rating on the shares. The move marks a boost for the company, which is set to leave the benchmark FTSE 100 index later this month.
As of 10:24 GMT, Just Eat’s share price had added 1.62 percent to 588.40p. The stock is outperforming the broader UK market, with the FTSE 100 having slipped marginally into negative territory and currently trading 0.19 percent lower at 6,760.65 points.
Liberum weighs in on Cat Rock comments
Liberum reiterated its ‘buy’ rating on Just Eat today, with a price target of 1,250p on the shares. The move came after it emerged yesterday that Cat Rock Capital Management, which owns about two percent of shares in the London-listed group, had slammed the company’s management, urging Just Eat to sell its ‘non-core’ businesses and align executive pay to financial targets.
“Some of Cat Rock’s comments have logic,” Liberum’s analyst Ian Whittaker commented, as quoted by Proactive Investors. “For example, there is an argument that Just Eat should not have committed to pegging Marketplace (i.e. the core of the business where restaurants do their own delivery) revenue growth to growth per order, meaning the commission rate is not raised.”
The analyst said that the broker “would also not be disappointed if Just Eat exited Australia which is somewhat unique because its high population concentration means it is vulnerable to attack”.
Bosses nevertheless seen having right strategy
Proactive Investors, however, also quoted Liberum’s Whittaker as commenting that Just Eat’s management nevertheless had adopted the right strategy of grabbing as much of the market as possible whilst telephone still accounts for around 40 percent of take-out orders.
“In the medium-term, once dominance is established, Just Eat can aggressively push up margins,” he pointed out.