Just Eat Takeaway vs. Delivery Hero: which stock could rally 60% in the coming months?

Delivery Hero SE (ETR: DHER) has outperformed its Dutch competitor Just Eat Takeaway.com NV (AMS: TKWY) since the beginning of this year.

However, the Berlin-based firm is not finished yet. According to Stifel analyst Benjamin Kohnke, Delivery Hero could continue to significantly outperform TKWY in 2025.

Kohnke sees a modest 17% upside for Just Eat Takeaway but recommends Delivery Hero as the better option to capitalize on ongoing growth in the online food delivery sector.

He indicated that Delivery Hero stock could yield a substantial 60% return over the next twelve months in a research note to clients on Tuesday.

Why is Delivery Hero stock poised for further gains?

Stifel remains bullish on Delivery Hero, noting that its management is fully committed to profitability rather than pursuing growth at all costs, which could help "unearth the inherent value of the business model."

The investment firm projects that Delivery Hero could achieve an adjusted EBITDA margin of 2.8% and a free cash flow yield of approximately 6.0% by fiscal 2026.

Additionally, shares of the German company are becoming more attractive, especially with its Middle Eastern subsidiaries expected to list on the Dubai Financial Market (DFM).

Analysts at Deutsche Bank anticipate that this move will enhance valuation in 2025.

It is important to note that Delivery Hero's stock is currently trading over 70% below its peak during the COVID-19 pandemic, a period that saw a significant increase in demand for food delivery services.

Just Eat Takeaway is growing at a much slower pace

Kohnke does not expect Just Eat Takeaway to be as lucrative an investment as Delivery Hero, as it is growing at a relatively slower pace than its German counterpart.

“Despite a strong financial profile in Northern Europe and improving performance in the UK, TKWY’s growth rate is significantly below that of its peers, justifying a valuation discount,” his research note states.

The Stifel analyst believes that Delivery Hero is better positioned to withstand rising competition from global giants such as DoorDash, Grab, and Uber.

Just Eat Takeaway has grown at a compound annual growth rate of 17% from 2019 to 2023, compared to an impressive 38% growth rate for Delivery Hero.

Kohnke is optimistic about Delivery Hero's share price, especially since global central banks have begun cutting interest rates.

Lower rates typically stimulate consumer spending, as individuals have more disposable income due to reduced borrowing costs, which can lead to increased orders for food delivery services.

Earlier this year, Delivery Hero sold its Taiwan business to Uber for $1.25 billion.