Market Overview

Investors Are Overestimating The Near-Term Benefit To GrubHub's Earnings From Eat24

Investors Are Overestimating The Near-Term Benefit To GrubHub's Earnings From Eat24
Related GRUB
Stifel: After 200% Gain In One Year, GrubHub Has Balanced Risk-Reward
Benzinga's Top Upgrades, Downgrades For March 19, 2018
Best Growth Stocks To Buy And Watch: See Updates To IBD Stock Lists (Investor's Business Daily)

Citigroup downgraded shares of GrubHub Inc (NYSE: GRUB), as it believes the recent run up in shares is now reflecting the near-term outlook. The firm noted that GrubHub shares have gained 44 percent in the year-to-date period and has added 12 percent or $6 per share since it announced the acquisition of Eat24 from Yelp Inc (NYSE: YELP).

As such, Citi downgraded shares of GrubHub from Buy to Neutral, with a 12-month fair value target at $56 per share. The firm feels at current levels, the company shares do not offer enough upside to warrant a Buy rating.

See also: When Should You Take A Slice Of Domino's Pizza Stock?

Citigroup's Mark May said his analysis suggested that the Eat24 acquisition as well as the smaller pending Foodler and OrderUp acquisitions, is worth only $4 per share to GrubHub's equity.

The analyst believes the investors are overestimating the near-term lift to GrubHub's earnings from Eat24, as he is of the view the integration and related cost synergies could take longer to realize.


That said, Citi said it remains positive on long-term fundamental outlook of the GrubHub's business.

In pre-market trading, shares of GrubHub were down 2.03 percent at $53.

Latest Ratings for GRUB

Mar 2018Stifel NicolausDowngradesBuyHold
Mar 2018Bank of AmericaDowngradesBuyNeutral
Feb 2018KeyBancMaintainsOverweightOverweight

View More Analyst Ratings for GRUB
View the Latest Analyst Ratings

Posted-In: Chaikin AnalyticsAnalyst Color Downgrades Restaurants Top Stories Analyst Ratings Tech General Best of Benzinga


Related Articles (YELP + GRUB)

View Comments and Join the Discussion!