Deliveroo’s sales could beat expectations and Just Eat Takeaway may be a takeover target, JP Morgan said as it upgraded both food delivery groups’ shares to ‘overweight’.
The bank said Deliveroo had overtaken Just Eat in London and tier two UK cities such as Birmingham, Leeds and Manchester. Just Eat still leads in more rural areas but Deliveroo is catching up, the bank added.
Just Eat is also achieving solid restaurant signups but faces more competition in rural areas. The share price values the UK business at zero and that could attract potential buyers for the group, JP Morgan said.
JP Morgan raised its recommendation on both shares from ‘neutral’ and upped its price target for Deliveroo to 392p from 332p. The bank trimmed its price target for Just Eat to £86.32 from £86.95.
“We see upside risk to [Deliveroo’s] 21E/22E GMV [gross market value] expectations and upgrade the shares,” JP Morgan analyst Marcus Diebel said in a note to clients. “For [Just Eat] … at current levels we believe the business is vulnerable to M&A given its strategic value.”
Just Eat shares rose 1.2% to £51.31 and Deliveroo’s shares gained 1.6% to 307.9p.
