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GrubHub Inc (NYSE:GRUB) investors have been rewarded with a more than 200-percent return over the past year, and the stock's risk-reward profile is now balanced, according to Stifel.
The Analyst
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Stifel's John Egbert downgraded GrubHub's stock rating from Buy to Hold with a price target lifted from $100 to $110.
The Thesis
GrubHub's outlook remains encouraging, particularly after a partnership with Yum! Brands, Inc. (NYSE:YUM) and the company's ongoing expansion to smaller Tier 2 and Tier 3 cities, Egbert said in the downgrade note. (See the analyst's track record here.)
The Yum! partnership will result in "material" incremental revenue for GrubHub's delivery business by 2019, which in turn will prompt other high-profile chains to feel the need to be featured on GrubHub's platform, the analyst said.
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Stifel's 2019 revenue estimates for GrubHub were lifted by 2 percent to $1.18 billion and the EPS estimate was raised from $2.19 to $2.24.
Despite an improved outlook for 2019, the high performance of GrubHub's stock needs to be factored into any rating decision, the analyst said. Shares are trading at a valuation of 31.5x 2019 EV/EBITDA and 1.7x 2010 EV/GFS, both of which are "elevated" relative to historical multiple ranges. While the stock could double in value over a three-to-five year period, the path ahead is unlikely to be linear, Egbert said.
Price Action
Shares of GrubHub were trading lower by 1.6 percent in Monday morning trading.
Bank Of America's Appetite For GrubHub Fades
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Photo courtesy of GrubHub.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.