On Friday, Redburn-Atlantic initiated coverage on Just Eat Takeaway.com NV (AS:TKWY:NA) (NASDAQ: GRUB) with a Sell rating, accompanied by a price target of €9.00. The firm sees a potential 17% downside to the current stock price, indicating skepticism about the company's prospects.
The new coverage by Redburn-Atlantic suggests concerns over Just Eat Takeaway's market position, especially in Germany and the Netherlands. The firm highlights the company's dependence on the third-party (3P) model, which could be a weakness as competition intensifies with rivals such as Uber (NYSE:UBER) Eats and DoorDash (NASDAQ:DASH).
Redburn-Atlantic believes that Just Eat Takeaway's industry-leading profitability may not have much scope for growth. This assessment comes despite market expectations to the contrary. The firm indicates that the current profitability levels might be nearing their peak, with limited opportunities for further expansion.
The analyst's remarks also point to potential risks in the company's portfolio strategy. Specifically, Redburn-Atlantic does not see significant downside protection from possible portfolio rationalization, such as the sale of the Grubhub (NYSE:GRUB) business.
The coverage launch and the Sell rating reflect Redburn-Atlantic's cautious stance on Just Eat Takeaway, based on the current competitive landscape in the food delivery sector and the company's reliance on a business model that may be under threat.
InvestingPro Insights
As Redburn-Atlantic casts a critical eye on Just Eat Takeaway.com NV, real-time data and insights from InvestingPro provide additional context for investors. Notably, the company's stock tends to exhibit low price volatility, suggesting a degree of stability despite market skepticism. However, this is juxtaposed with weak gross profit margins, which could underscore the firm's concerns about the company's financial robustness in a highly competitive environment. Moreover, the valuation of Just Eat Takeaway implies a poor free cash flow yield, potentially validating Redburn-Atlantic's wariness about the stock's growth potential.
On a more positive note, analysts predict that the company will be profitable this year, which may offer some solace to investors amidst the Sell rating. It's also worth mentioning that Just Eat Takeaway does not pay a dividend, which might influence investment decisions for those seeking income-generating stocks. For investors looking to delve deeper into the company's prospects, there are additional InvestingPro Tips available, which can be accessed with the code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. In total, there are 5 InvestingPro Tips listed for Just Eat Takeaway, offering a more comprehensive analysis for informed decision-making.
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