Buy The Dip In GrubHub, Sterne Agee CRT Says

In a report published Wednesday, Sterne Agee analyst Arvind Bhatia maintained a Buy rating on GrubHub Inc GRUB, with a price target of $56. GrubHub's share price has declined 32 percent since the announcement of the 1Q results. The pressure on shares was on account of concerns over a slowdown in GrubHub's business, increased competition, the company's increased investments in the delivery aspect of business. Analyst Arvind Bhatia views the recent pullback as an "attractive entry point for investors" and believes that the concerns are "short-term" in nature. The decline in the company's share price was "exacerbated by the relatively high-multiple GRUB shares were carrying," Bhatia added. GrubHub's growth prospects remain bright, with its newer markets performing well, and the company's 2Q and full-year guidance remains intact. In the report Sterne Agee noted, "GRUB has the dominant platform focused on takeout at independent restaurants in the US. This is a $70 billion US market that is 95% offline (inefficient) and ripe for disruption from online/mobile technologies." Bhatia expects GrubHub's US market share to expand from 3 percent at present to more than 7 percent over the next five years.