Market Overview

Stifel: After 200% Gain In One Year, GrubHub Has Balanced Risk-Reward

Share:
Stifel: After 200% Gain In One Year, GrubHub Has Balanced Risk-Reward
Related GRUB
Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolio
GrubHub Gets Some Love From DA Davidson, Stephens
Bright Prospects For Eventbrite, But It's In The Price (Seeking Alpha)

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

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.

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. 

Related Links:

Bank Of America's Appetite For GrubHub Fades

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

Photo courtesy of GrubHub. 

Latest Ratings for GRUB

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

View More Analyst Ratings for GRUB
View the Latest Analyst Ratings

Posted-In: food Food DeliveryAnalyst Color Downgrades Price Target Restaurants Analyst Ratings General Best of Benzinga

 

Related Articles (YUM + GRUB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
BBCIBCUpgrades0.0
BKNGWells FargoUpgrades0.0
DARJP MorganUpgrades25.0
EEXBarclaysDowngrades12.0
HPCredit SuisseUpgrades65.0
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.

3 Japan Mutual Funds To Consider On Steady Economic Expansion

Mid-Morning Market Update: Markets Open Lower; KLA-Tencor To Buy Orbotech