GrubHub Leads The Online Restaurant And Delivery Sector, Says KeyBanc Analyst
GrubHub Inc (NYSE: GRUB) stock has gained 175 percent since the start of 2017, which has some analysts suggesting investors move to the sidelines. But after conducting firsthand checks with restaurant owners and managers, KeyBanc Capital Markets said the case for further upside can still be made.
The Analyst
KeyBanc's Brad Erickson maintains an Overweight rating on GrubHub's stock with an unchanged $115 price target.
The Thesis
Erickson's checks and conversations with 20 restaurant owners and managers across five cities were as positive as any he's had since initiating coverage of GrubHub, the analyst said in a Wednesday note.
The analyst's three main takeaways are:
GrubHub continues to account for the majority of delivery volume for 75 percent of respondents.
Online penetration rates continue to move higher, and GrubHub is the competitor gaining market share in the space that's mentioned most often.
One of GrubHub's biggest competitors, UberEats, values "food delivery below that of driving people."
One of the biggest investor questions surrounding GrubHub is the sustainability of its business model, Erickson said: if GrubHub takes a big chunk of a restaurant's profit, why would they continue to use the service?
The answer is simple, Erickson said. It is up to consumers to decide how they order food, and restaurants can decide to leave the platform if they choose, or remain on a platform that's essentially "the only source of growth in the industry," he said.
Price Action
GrubHub shares were down 0.87 percent at the time of publication Thursday.
Related Links:
After Recommending GrubHub For Over A Year, Morgan Stanley Takes Neutral Stance
Stifel: After 200% Gain In One Year, GrubHub Has Balanced Risk-Reward
Photo courtesy of GrubHub.
Latest Ratings for GRUB
Apr 2018 | Morgan Stanley | Downgrades | Overweight | Equal-Weight |
Apr 2018 | Stephens & Co. | Initiates Coverage On | Overweight | |
Mar 2018 | Stifel Nicolaus | Downgrades | Buy | Hold |
View More Analyst Ratings for GRUB
View the Latest Analyst Ratings
See more from Benzinga
After Recommending GrubHub For Over A Year, Morgan Stanley Takes Neutral Stance
Stifel: After 200% Gain In One Year, GrubHub Has Balanced Risk-Reward
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
