Market Overview

GrubHub Leads The Online Restaurant And Delivery Sector, Says KeyBanc Analyst

Share:
GrubHub Leads The Online Restaurant And Delivery Sector, Says KeyBanc Analyst

GrubHub Inc (NYSE: GRUB) stock has gained 175 percent since the start of 2017, which has some analysts suggesting investors move to the sidelines. But after conducting firsthand checks with restaurant owners and managers, KeyBanc Capital Markets said the case for further upside can still be made.

The Analyst

KeyBanc's Brad Erickson maintains an Overweight rating on GrubHub's stock with an unchanged $115 price target.

The Thesis

Erickson's checks and conversations with 20 restaurant owners and managers across five cities were as positive as any he's had since initiating coverage of GrubHub, the analyst said in a Wednesday note. 

The analyst's three main takeaways are:

  • GrubHub continues to account for the majority of delivery volume for 75 percent of respondents.
  • Online penetration rates continue to move higher, and GrubHub is the competitor gaining market share in the space that's mentioned most often.
  • One of GrubHub's biggest competitors, UberEats, values "food delivery below that of driving people."

One of the biggest investor questions surrounding GrubHub is the sustainability of its business model, Erickson said: if GrubHub takes a big chunk of a restaurant's profit, why would they continue to use the service?

The answer is simple, Erickson said. It is up to consumers to decide how they order food, and restaurants can decide to leave the platform if they choose, or remain on a platform that's essentially "the only source of growth in the industry," he said. 

Price Action

GrubHub shares were down 0.87 percent at the time of publication Thursday.

Related Links:

After Recommending GrubHub For Over A Year, Morgan Stanley Takes Neutral Stance

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

Photo courtesy of GrubHub. 

Latest Ratings for GRUB

DateFirmActionFromTo
Oct 2019MaintainsEqual-Weight
Sep 2019MaintainsOutperform
Jul 2019MaintainsOutperform

View More Analyst Ratings for GRUB
View the Latest Analyst Ratings

Posted-In: Brad Erickson foodAnalyst Color Price Target Reiteration Restaurants Analyst Ratings General Best of Benzinga

 

Related Articles (GRUB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ELMDDougherty & Co.Initiates Coverage On12.0
MRNSCantor FitzgeraldAssumes7.0
MNRLCapital One FinancialInitiates Coverage On23.0
SONVertical GroupUpgrades
UNPMorgan StanleyMaintains136.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
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.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

All The Fun Salary Info Uncovered In Facebook's Proxy Statement

Upcoming Earnings: Industrial Conglomerate GE Reports Friday Morning