Your order is on its way—analysts back Just Eat Takeaway after buying spree
Finding U.S. rival DoorDash bloated and overvalued, analysts are leaning toward Netherlands-based Just Eat Takeaway as meal delivery leader after gobbling up its stateside rival Grubhub.
Just Eat Takeaway has been on a buying spree this pandemic, acquiring Just Eat in the U.K. for $7.2 billion in April 2020 and then beating out rivals in Europe to acquire U.S.-based Grubhub for $7.5 billion a year later.
Now that Grubhub is fully integrated into the company, Just Eat Takeaway will face its biggest test—capturing the U.S. market.
The company has a long way to go in America. DoorDash handled more than half of all meal deliveries in the U.S. as of the last week in April, according to Edison Trends, while Grubhub has a significantly lower 17% market share.
But a new report by Bank of America analysts notes that DoorDash, which is only 1.6 times larger than Grubhub in terms of sales, has a market value that is 10 times larger—indicating a positive risk-reward ratio for Just Eat.
As a result, BoA analysts project the Just Eat Takeaway share price objective to be €135 ($161), far greater than the €76.60 share price the company is currently traded at. They’re advising investors to hold on to the stock.
Just Eat Takeaway’s geographical reach is a core advantage, operating across 24 countries. The company has a 45% market share in the U.K., according to Edison Trends, which analysts indicate will drive growth, while markets like the Netherlands and Germany will continue to bring in strong profits.
Analysts note that while Just Eat Takeaway is a market leader in its core markets, delivery firms’ penetration in the total addressable market is less than 5%, again indicating room for growth.
In Europe, a lot of Just Eat Takeaway’s success has come down to spending more than €700 million on drivers in 2020 and winning partnerships with chains like McDonald’s and Starbucks.
CEO Jitse Groen now hopes to do the same in the United States. And with 2021 U.S. digital spending on breakfast items via delivery apps up 263% from 2020, according to Edison Trends, the market is ripe for a similar opportunity.
The pandemic has been a flourishing time for meal delivery companies, with government-imposed curbs shuttering restaurants and keeping patrons housebound. In the first two months of 2021 alone, Just Eat Takeaway reported an 88% surge in orders.
But with rivals in every market and the company having yet to turn a profit, it is no surprise investors are still skeptical about the enlarged group, which now has a market value of €16 billion.
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