GrubHub Reiterated Buy At Brean; Firm Sees 'Another Strong Performance' In Q3

• GrubHub Inc GRUB shares have been declining steadily since April 24 and are down 32 percent in the last six months.
• Brean Capital’s Tom Forte maintained a Buy rating on the company, with a price target of $50.
• The recent pullback in GrubHub’s shares offers an attractive buying opportunity, Forte mentioned.

Analyst Tom Forte said that investor concerns around increased competition in the online restaurant delivery segment have put significant pressure on GrubHub’s shares. He added, however, that this has created a buying opportunity.

Forte believes that online restaurant delivery would perform well, with GrubHub likely to emerge as “one of the long-term winners.”

GrubHub is expected to report 3Q revenues of $85.8 million, ahead of the consensus estimates and the company’s guidance. The company’s adjusted EBITDA margin is, however, expected to decline by 308 basis points to 29.9 percent due to planned investment spending to ramp up its first-party delivery efforts.

The company’s future performance will depend on its ability to expand its operations in the less developed cities as its two largest markets of Chicago and New York mature, the analyst mentioned

A weakening of general economic conditions, heightened competition and greater-than-expected margin degradation from the company’s acquisition of restaurant delivery companies could impact GrubHub’s future share price movement.