Market Overview

Bank Of America's Appetite For GrubHub Fades

Bank Of America's Appetite For GrubHub Fades
Related GRUB
Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolio
GrubHub Gets Some Love From DA Davidson, Stephens

Shares of GrubHub Inc (NYSE: GRUB) have gained more than 180 percent over the past year, which makes the stock "less attractive" at current levels, according to Bank of America Merrill Lynch. 

The Analyst

Bank of America's Nat Schindler downgraded GrubHub's stock rating from Buy to Neutral with an unchanged $102 price target.

The Thesis

GrubHub's fundamentals remain "solid" and investor concerns surrounding the growing food delivery space are "overstated," Schindler said in the downgrade note. (See Schindler's track record here.)

The company continues to improve its scale and introduce new partnerships that will contribute to 50-percent growth in active diners on the platform in 2018 and another 14 percent in 2019, the analyst said. 

The Street has been active in boosting the consensus 2018 and 2019 EPS estimate and this trend is likely to continue throughout 2018, Schindler said. Upside to current estimates is likely to come from faster integration of Eat24, the inclusion of Yum! Brands, Inc. (NYSE: YUM)'s restaurants and the potential for even more partnership announcements, he said. 

Despite clear momentum in the near term, GrubHub's stock valuation needs to be taken into consideration, the analyst said. Shares are trading at 44x the analyst's 2019E EPS — a premium to other high-growth lead generation stocks that trade at about a 38x multiple. GrubHub is "fairly valued" at current levels, according to BofA. 

Price Action

GrubHub shares were down 3.81 percent at $98.09 Tuesday morning. 

Related Links:

Morgan Stanley: The Biggest Internet Stock Winners From Tax Reform

Credit Suisse Has Had Its Fill Of Grubhub Shares, Downgrades To Neutral

Photo courtesy of GrubHub. 

Latest Ratings for GRUB

Nov 2018ArgusMaintainsBuyBuy
Oct 2018Wells FargoMaintainsMarket PerformMarket Perform
Oct 2018Canaccord GenuityMaintainsBuyBuy

View More Analyst Ratings for GRUB
View the Latest Analyst Ratings

Posted-In: Bank of America foodAnalyst Color Downgrades Price Target Restaurants Analyst Ratings General Best of Benzinga


Related Articles (YUM + GRUB)

View Comments and Join the Discussion!

Latest Ratings

CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Market Signals To Watch For March 6, 2018

Women's Wealth Gap: Why Everyone, Especially Employers Should Be Concerned