Grubhub's Q3 Results Likely Driven By Delivery, Technology Improvements

GrubHub Inc GRUB is scheduled to report its Q3 earnings on October 27, and Loop Capital’s Blake Harper believes that the results would come in marginally ahead of the consensus expectations, with about 38 percent year on year revenue growth and 48 percent year on year EBITDA growth.

Harper maintains a Buy rating on the company with a price target of $46.

Q3 Results

“We believe the company has continued to gain traction with its delivery service based on feedback from restaurant chains,” the analyst mentioned, while adding that “the recent introduction of gift cards should have a modest positive impact over time and more tech upgrades should continue to drive incremental improvements to metrics.”

Related Link: Grubhub Setting The Table For Earnings Growth In 2017

Harper believes the Q3 results would be driven by delivery and tech improvements, given the delivery investments restaurant partnerships and UX improvements. These are also likely to help the Q4 guidance meet the consensus expectations.

“Current investments should drive longer term growth and enable the delivery business to hit break-even in 2017,” the analyst said.

Failed Caviar Sale

However, the failed attempt at selling Caviar demonstrates the difficult that several competitors are likely to face, while supporting Harper’s belief that Grubhub would be among the players with dominating market share in the online food ordering and delivery space.

At last check, Grubhub was flat on the day, trading at $41.57.

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