GrubHub a 'Feast of Opportunity,' Morgan Stanley Says

GrubHub Inc GRUB is poised for explosive growth moving forward, Morgan Stanley said in a research note today. The company is at the early stages of a secular shift within the take out and delivery industry.

Notably, Morgan Stanley debunked an investor myth, mentioning that small city behavior is similar with big city patterns. So, GrubHub’s potential for growth is not only in large cities, but in every locality.

Morgan Stanley also looked abroad to find similar businesses and how they were penetrating the market. For example, Just Eat PLC, which is in the UK and Denmark, has achieved adoption rates in excess of GrubHub, the analysts said.

Further, inside current cities, Morgan Stanley said that GrubHub has room to grow current awareness. In New York, the company has just 50 percent awareness among consumers. Outside of New York, that number grows to 80 percent, according to Morgan Stanley’s research.

The analysts noted that they expect 17.5 percent upside to the stock – reflected in a price target of $50.