"European Online Food Delivery Stocks: Stifel's Strategic Insights on Delivery Hero and Just Eat Takeaway for Savvy Investors"
In the fast-evolving world of online food delivery, understanding market dynamics is key to making informed investment decisions. Stifel, a leading financial services firm, has initiated coverage on two major players in this space: Delivery Hero and Just Eat Takeaway. This analysis comes at a pivotal moment as the industry shifts from aggressive growth tactics, known as "Blitzscaling," towards a focus on profitability and market dominance.
Key Insights:
- Delivery Hero's Strong Market Position: Stifel has given Delivery Hero a "buy" rating with a price target of €60, highlighting its robust growth prospects. The company's strategic focus on core markets like South Korea and the Middle East, along with plans to IPO its Middle Eastern arm, talabat, in late 2024, positions it well for future success. These moves are anticipated to enhance shareholder value significantly.
- Just Eat Takeaway's Conservative Outlook: While Just Eat Takeaway has made progress in profit margins, particularly in Northern Europe, it received a "hold" rating with a price target of €14.80. Its growth trajectory lags behind its competitors, and the absence of immediate growth catalysts suggests limited short-term upside.
- Industry Trends and Challenges: Both companies are navigating challenges to maintain profitability amidst fierce competition. The broader trend of exiting less profitable markets—such as Delivery Hero's exit from Taiwan and Vietnam, and Just Eat Takeaway's from New Zealand and France—reflects a strategic consolidation in the industry.
- Competitive Landscape and Potential M&A Activity: The sector continues to face stiff competition from global giants like Uber Eats and DoorDash, as well as emerging players like Meituan. Stifel's analysis also hints at potential mergers and acquisitions, which could reshape the competitive landscape, such as the speculated acquisition of Deliveroo by DoorDash, potentially impacting Just Eat Takeaway's standing in markets like the UK and Ireland.
Breaking It Down for You:
In simpler terms, the online food delivery industry is maturing. Companies like Delivery Hero and Just Eat Takeaway are shifting from simply expanding to becoming more profitable by focusing on their strongest markets and cutting losses in weaker ones. Stifel prefers Delivery Hero because it's better positioned for growth, especially in places like South Korea and the Middle East. Meanwhile, Just Eat is making money but not growing as fast as others.
Why does this matter to you? If you're considering investing in these companies, Delivery Hero might offer more potential for growth. Keep an eye on industry changes, like potential buyouts, which could affect these companies' market positions and your investment's value. Understanding these dynamics can help you make smarter decisions with your money.