Proactiveinvestors United Kingdom Just Eat https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom Just Eat RSS feed en Mon, 27 May 2019 08:40:53 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[News - Just Eat shares go sour as Amazon backs Deliveroo in US$575mln funding round ]]> https://www.proactiveinvestors.co.uk/companies/news/220500/just-eat-shares-go-sour-as-amazon-backs-deliveroo-in-us575mln-funding-round-220500.html Shares in FTSE 100 takeaway platform Just Eat PLC (LON:JE.) turned sour on Friday after news that tech giant Amazon Inc (NASDAQ:AMZN) had led a US$575mln (£450mln) funding round for rival Deliveroo.

The funding round, which also included existing Deliveroo investors T. Rowe Price, Fidelity Management and Research Company, and Greenoaks, takes the total amount raised by the firm to US$1.53bn.

READ: Just Eat double-downgraded to ‘underweight’ as JP Morgan sounds alarm on UK order growth

The extra funding would be used to grow the company’s engineering team, expand its offering to new customers and develop new products, Deliveroo said in a statement.

Amazon’s investment followed rumours that the group had previously approached Deliveroo with a view to buying it outright after its own food delivery offering flopped and was pulled out of the UK last year.

Will Shu, Deliveroo’s founder and chief executive, said the company looked forward to working with “a customer-obsessed organisation” like Amazon.

Just Eat’s investors, however, were less enthused at the prospect of increased competition and sent the shares sliding 7.7% to 625.6p in lunchtime trading.

In a note, analysts at Liberum said Amazon’s investment in Deliveroo would raise concerns over Just Eat’s business model.

However, the broker reiterated its ‘buy’ rating and 1,360p target price on the stock, saying these concerns were “overdone” as despite Amazon’s backing for Deliveroo, Just Eat’s dominant market position would be “incredibly difficult to overcome, especially given its strength in smaller towns”.

“Just Eat is #1 in its markets and, in the UK, it has an estimated x3-4 greater share than Uber Eats and Deliveroo combined and, crucially, 60%+ of its customers are in small towns where it is effectively the only option for restaurants and where the Uber Eats / Deliveroo model just doesn't work because of the economics.”

What Liberum did think was more likely was that Just Eat and other competitors would be acquired by bigger players including ride-hailing firm Uber Technologies Inc (NYSE:UBER), which is currently trying to compete with its own UberEats platform, as well as other US food groups such as GrubHub and DoorDash, which are looking to expand internationally.

Peel Hunt, meanwhile, was less optimistic and reiterated their ‘sell’ rating and 520p target price for Just Eat, saying Amazon’s investment in “the more expensive delivery side of the takeaway market” would put pressure on the company as it had not developed its own delivery offering as fully as its competitors.

“Curse of Amazon” strikes again

Russ Mould, investment director at AJ Bell, said that the share price reaction at Just Eat was another indicator that Amazon was now “so dominant” that the mere mention of its name was enough to leave shareholders “quaking with fear”.

“Given its financial firepower it is little wonder that Amazon effectively parking its tanks on Just Eat’s lawn is spooking investors”, Mould said, adding that the news was likely to ramp up the pressure on the company’s management to increasingly reshape the business to offer delivery services alongside its takeaway ordering platform.

He also echoed Liberum’s view that the downward push on the share price could leave the company vulnerable to being “swallowed up” by a larger peer.

--Adds analyst comment and updates share price-- 

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Fri, 17 May 2019 09:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/220500/just-eat-shares-go-sour-as-amazon-backs-deliveroo-in-us575mln-funding-round-220500.html
<![CDATA[News - Just Eat double-downgraded to ‘underweight’ as JP Morgan sounds alarm on UK order growth ]]> https://www.proactiveinvestors.co.uk/companies/news/219468/just-eat-double-downgraded-to-underweight-as-jp-morgan-sounds-alarm-on-uk-order-growth-219468.html Just Eat PLC (LON:JE.) has been hit by a double downgrade from ‘overweight’ to ‘underweight’ by JP Morgan, with analysts sounding the alarm over a slowdown in UK order growth.

In a note, the investment bank said the firm’s UK market remained its most “significant share price driver”, but order growth in the territory had slowed to 7% in its latest first quarter from 13% in the fourth quarter of 2018.

READ: Just Eat blames warm February weather as it posts weakest Q1 order growth since listing

Analysts said high exposure to “less attractive” eateries, cannibalisation from delivery restaurants that had signed up to its platform and poor tech execution had all taken their toll on the FTSE 100 takeaway firm.

“We expect order growth for the UK to remain subdued going forward and materially reduce our UK valuation from £2.3bn to £1.7bn”, the bank said as it slashed its target price to 682p from 822p.

JP Morgan added that while mergers and acquisitions were “a risk”, they saw “limited appetite” for any large scale disposals among Just Eat’s shareholders.

The assessment left a bad taste in the mouth for investors, with shares slipping 2.5% to 681.4p in late-morning on Wednesday.

Warm weather blamed for sub-par performance

The downgrade followed Just Eat's first quarter results last week, where the company blamed February’s warm weather after it missed expectations across the board, prompting fresh fears over the threat of Uber Eats and Deliveroo.

The number of orders placed through the company’s online takeaway marketplace increased by 21% year-on-year in the three months ended 31 March. Revenue jumped by almost a third to US$227.9mln.

But City analysts had forecast order growth of closer to 25%, with sales tipped to come in at US$234mln.

The performance in the UK, which accounts for more than half of the business, was particularly bleak as orders edged 7.4% higher – the weakest first-quarter growth on record.

Analysts had always expected a slight deceleration in growth, although their estimate of a 13% jump in orders was missed.

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Wed, 01 May 2019 11:42:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/219468/just-eat-double-downgraded-to-underweight-as-jp-morgan-sounds-alarm-on-uk-order-growth-219468.html
<![CDATA[RNS press release - Results of Annual General Meeting ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190501104645_14059235/ Wed, 01 May 2019 10:46:45 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190501104645_14059235/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190430163501_14057976/ Tue, 30 Apr 2019 16:35:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190430163501_14057976/ <![CDATA[News - Just Eat blames warm February weather as it posts weakest Q1 order growth since listing ]]> https://www.proactiveinvestors.co.uk/companies/news/219162/just-eat-blames-warm-february-weather-as-it-posts-weakest-q1-order-growth-since-listing-219162.html Just Eat PLC (LON:JE.) has blamed February’s warm weather after it missed expectations across the board with its first-quarter numbers, prompting fresh fears over the threat of Uber Eats and Deliveroo.

The number of orders placed through the company’s online takeaway marketplace increased by 21% year-on-year in the three months ended 31 March. Revenue jumped by almost a third to US$227.9mln).

READ: Why Uber's upcoming US$100bn IPO could be bad news for Just Eat

But City analysts had forecast the FTSE 250 group to deliver order growth of closer to 25%, with sales tipped to come in at US$234mln.

The performance in the UK, which accounts for more than half of the business, was particularly bleak as orders edged 7.4% higher – the weakest first-quarter growth on record.

Analysts had always expected a slight deceleration in growth, although their estimate of a 13% jump in orders was missed.

Warm weather to blame for weak UK growth

Just Eat bosses said the “unseasonably warm” weather in February, coupled with Easter entirely falling in the second quarter and a strong comparative was to blame for the woeful UK performance.

“We would expect an improvement in UK order growth during the remainder of the year,” the company asserted in Friday’s update.

Analysts weren’t so confident, with Liberum speculating that the continued rise of Uber Eats and Deliveroo, with their deep pockets, is denting demand for Just Eat’s services.

“Concerns on weak orders and UK competition from Uber Eats & Deliveroo will be raised as other food delivery portals such as Delivery Hero have recently reported strong results,” said the City broker in a note to clients.

Full-year guidance reiterated

The company also operates in other countries such as Canada, Italy and Switzerland, and orders outside the UK grew by 40% compared to the first quarter of last year.

Full-year guidance for revenue in the range of £1.0bn-£1.1bn and underlying earnings (EBITDA) of between £185-205mln was reiterated.

“Just Eat is on the right path to be the leading hybrid marketplace for online food delivery and we are confident in the delivery of our strategy,” said Peter Duffy, who is standing in as chairman while a successor for Peter Plumb is found.

“Many of our international markets have performed very well in the period although, as expected, we saw softer UK order growth in the quarter.”

Shares dropped 4.1% to 718p at the opening bell on Friday.

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Fri, 26 Apr 2019 08:25:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/219162/just-eat-blames-warm-february-weather-as-it-posts-weakest-q1-order-growth-since-listing-219162.html
<![CDATA[RNS press release - 1st Quarter Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190426070007_14052744/ Fri, 26 Apr 2019 07:00:07 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190426070007_14052744/ <![CDATA[News - Why Uber’s upcoming US$100bn+ IPO could be bad news for Just Eat ]]> https://www.proactiveinvestors.co.uk/companies/news/218504/why-ubers-upcoming-us100bn-ipo-could-be-bad-news-for-just-eat-218504.html Analysts at one City broker have warned that Uber Technologies Inc’s upcoming IPO could spell bad news for online takeaway marketplace Just Eat PLC (LON:JE.).

After the closing bell in New York on Thursday, Uber filed an S-1 form with US regulators, setting the stage for a float that could value the company at more than US$100bn.

READ: Uber files for IPO

According to reports, Uber will look to raise around US$10bn in fresh capital as part of its listing, which Peel Hunt has speculated it could use to beef up its Uber Eats food delivery arm.

Analysts argue that, that side of the business has rapidly gained market share and has established itself as a key part of the overall group, so it makes sense for bosses to plough more money into it.

“Of the 91mln monthly actives on [Uber’s] platform, over 15mln received a meal using Uber Eats in the quarter ended 31 December 2018, using its network of 220,000+ restaurants in over 500 cities around the world,” read a note to clients.

“In the same quarter, consumers who used both a taxi and Uber Eats had 11.5 trips per month on average, compared with 4.9 trips per month on average for consumers who used a single offering in cities where both were offered.

“Moreover, the synergies are obvious: Uber Eats attracts new consumers to its network – in the same quarter, 50% of first-time Uber Eats consumers were new to [Uber’s] platform.”

‘Sell’ rating repeated

They concluded: “Overall, this heavy investment, new primary proceeds, and the strong performance year-on-year shows that Uber is a continuing and growing threat to Just Eat.”

The analysts repeated their ‘sell’ recommendation for Just Eat, as well as their bearish 520p price target.

In early afternoon trading on Friday, Just Eat shares were up 2.1% to 736p.

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Fri, 12 Apr 2019 12:45:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218504/why-ubers-upcoming-us100bn-ipo-could-be-bad-news-for-just-eat-218504.html
<![CDATA[RNS press release - Block Listing Six Monthly Return ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190405171154_14031423/ Fri, 05 Apr 2019 17:11:54 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190405171154_14031423/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190329165128_14022154/ Fri, 29 Mar 2019 16:51:28 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190329165128_14022154/ <![CDATA[RNS press release - 2018 Annual Report & Notice of 2019 AGM ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190325172900_14014975/ Mon, 25 Mar 2019 17:29:00 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190325172900_14014975/ <![CDATA[RNS press release - TR-1: Notification of major holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315145657_14004561/ Fri, 15 Mar 2019 14:56:57 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315145657_14004561/ <![CDATA[RNS press release - SHARE AWARDS ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315133051_14004467/ Fri, 15 Mar 2019 13:30:51 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315133051_14004467/ <![CDATA[RNS press release - Share Awards ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315073002_14003667/ Fri, 15 Mar 2019 07:30:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190315073002_14003667/ <![CDATA[News - Barclays concerned that Uber Eats will eat into Just Eat’s market share in 2019 ]]> https://www.proactiveinvestors.co.uk/companies/news/216002/barclays-concerned-that-uber-eats-will-eat-into-just-eats-market-share-in-2019-216002.html Barclays has cut its rating for online food delivery marketplace Just Eat PLC (LON:JE.) over concerns that Uber Eats is becoming “more aggressive” with its UK expansion.

According to the investment bank’s London arm, Just Eat’s recent full-year results suggested “weak” fourth-quarter order growth in the firm’s core UK market.

READ: Just Eat swings back to a profit

They pointed to a couple of recent developments – Uber Eats cutting its fees last month and agreeing to sponsor popular reality TV show, Love Island – as signs that Uber is ready to take the fight to Just Eat even more in the year ahead.

“These events have happened after the FY, but we believe are clear anecdotal evidence that Uber is becoming more aggressive in '19 in the UK, which remains ~90% of group EBITDA (underlying earnings),” read a note to clients.

The abacus rattlers reckon a break-up of the FTSE 250 group, as suggested recently by activist investor Cat Rock, could provide some “upside risk”, though.

“We see potential merit in this,” Barclays said.

“The industry has relatively quickly consolidated; we anticipate that this will continue and JE has assets which we believe could be non-core, which include Latin America and Australia.”

Uber Eats to buy Just Eat?

Just Eat could go one step further, according to one City analyst: Peel Hunt’s James Lockyer who has mooted the possibility of a Just Eat-Uber Eats tie-up.

“Could the Lyft IPO imply that Uber is coming to the market?” he asked.

“With cash raised, it could acquire Just Eat, solving a lot of issues. Just Eat: delivery through a larger entity. Uber Eats: enter marketplace model much faster.”

There was no mention of that from Barclays, which kept its 785p price target in place but cut its rating to ‘equal weight’ from overweight’, citing “limited upside” to its target.

Just Eat shares fell 1.3% to 770p on Thursday.

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Thu, 07 Mar 2019 11:05:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216002/barclays-concerned-that-uber-eats-will-eat-into-just-eats-market-share-in-2019-216002.html
<![CDATA[News - Just Eat swings back to a profit as recent investments start to deliver ]]> https://www.proactiveinvestors.co.uk/companies/news/215895/just-eat-swings-back-to-a-profit-as-recent-investments-start-to-deliver-215895.html Just Eat PLC’s (LON:JE.) huge investment into the delivery side of its business looks to be paying off as a surge in orders helped the online takeaway marketplace to swing back to a profit last year.

The FTSE 250 group poured £51mln into rolling out its delivery service last year as management looks to head off the growing threat posed by rich rivals Uber Eats and Deliveroo.

READ: Just Eat CEO to step down as it raises 2018 guidance and expects growth in 2019

Its ‘strategic investment’ is likely not done there, with Just Eat telling the market back in November that it expects to spend up to £60mln in total on building out that side of the business.

Accelerating growth of delivery orders, which more than trebled, contributed to a 43% jump in revenues last year to £779.5mln (2017: £546.3mln).

Shares drop, though

Strong underlying marketplace order growth and the inclusion of HungryHouse this time around also helped to push up the numbers.

Underlying earnings (EBITDA) climbed 6% year-on-year to £173.9mln (2017: £163.5mln), reflecting the costs of investment and the impact of lower margin delivery orders.

Just Eat recorded a pre-tax profit of £101.7mln last year versus a loss of £76.0mln in 2017, when it took a hefty one-off charge related to its Australia and New Zealand business.

But shares, which had risen by more than 30% so far this year, fell at the opening bell on Wednesday by 2.9% to 758.2p.

Guidance in-line with City forecasts

As for what to expect in the year ahead, the takeaway firm is guiding for revenue of £1.0-1.1bn and underlying earnings in the range of £185-205mln, in line with what City analysts had forecast.

The Canadian side of the business, called SkipTheDishes, is expected to enjoy its first full year of profitability, although Just Eat’s struggling Latin American operations will likely cost it £80-100mln.

“Just Eat's continued strong growth and strategic investments saw more than four million new customers join us in 2018,” said interim chief executive Peter Duffy.

“We are creating a leading hybrid offering founded on our unrivalled marketplace, combined with the targeted roll-out of delivery.

“This gives our growing customer base access to the greatest choice of restaurants and drives even more orders to our Restaurant Partners, ultimately strengthening the network effects of our business.”

CEO search underway

Duffy is filling the CEO role temporarily while Just Eat finds a permanent successor to Peter Plumb, who stepped down in January after less than two years in charge.

There was no news on who the new boss might be in Wednesday’s results, although chairman Mike Evans did confirm that a search is underway.

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Wed, 06 Mar 2019 08:43:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215895/just-eat-swings-back-to-a-profit-as-recent-investments-start-to-deliver-215895.html
<![CDATA[RNS press release - FY18 Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190306070006_13991478/ Wed, 06 Mar 2019 07:00:06 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190306070006_13991478/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190228163503_13986014/ Thu, 28 Feb 2019 16:35:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190228163503_13986014/ <![CDATA[News - Just Eat to re-join FTSE 100 index next month, just one quarter after demotion; Phoenix Group also gains blue chip status ]]> https://www.proactiveinvestors.co.uk/companies/news/215547/just-eat-to-re-join-ftse-100-index-next-month-just-one-quarter-after-demotion-phoenix-group-also-gains-blue-chip-status-215547.html Just Eat PLC (LON:JE.) will be re-joining the FTSE 100 index next month, just one quarter after the online food delivery firm made its bow from the blue chips.

The FTSE UK indexes quarterly reshuffle was announced after the London market close on Wednesday – and was based on Tuesday’s closing prices – with the changes to come in effect at the start of trading on Monday 18 March.

READ: Just Eat in demand as major shareholder calls for merger talks

Life insurance consolidator Phoenix Group Holdings PLC (LON:PHNX) also gained promotion to the FTSE 100 index from the FTSE 250 index, while going the other way will be merged betting group GVC Holdings PLC (LON:GVC) and oil services firm John Wood Group PLC (LON:WG.).   

In reaction, Just Eat shares were 2.6% higher at 743.60p in late afternoon trading, while Phoenix Group shares were up 0.9% at 695.40p. Shares in GVC shed 2.1% at 655.50p, and Wood Group lost 3% at 522.80p.

Russ Mould, AJ Bell’s investment director commented: “Both life insurer Phoenix and online food order and delivery service provider Just Eat are going into the FTSE 100, thanks to their respective market valuations of £5.0bn and £4.9bn.

“That is enough to rank them 88th and 89th by market cap, just above the 91st place cut-off point and enough to merit automatic promotion.”

He pointed out: “This is Phoenix’s first flight into the FTSE 100, while it represents a rapid return for Just Eat, just three months after its demotion in December.”

READ: Phoenix Group's Standard Life transaction a win-win deal

Mould added: “We have already had two changes to the FTSE 100’s membership since the last reshuffle in December, thanks to successful bids for Randgold Resources and Shire, who were replaced by Auto Trader and Hikma, and the latest quarterly review brings further changes.”

Just Eat stormed into the FTSE 100 in the fourth quarter of 2017, within four years of its April 2014 flotation. however, anyone who tucked into the stock on the back of its promotion ended up with a bad case of indigestion as the shares peaked in January 2018, almost immediately after its entry to the index.

Mould pointed out that Just Eat’s share price slide began when then chief executive Peter Plumb announced a plan to invest £50mln in delivery services, subsequently stepped up to £55mln to £60mln.

Just Eat had previously positioned itself as an online platform for takeaway outlets who then took care of delivery themselves.

However there a better end to the year, when Just Eat announced in January that it would exceed sales expectations for 2018 and raised them for 2019, although that was somewhat overshadowed by CEO Plumb’s resignation.

Activist pressure on Just Eat

Mould noted that the company is still looking for a full-time boss at a time when it faces pressure from shareholder Cat Rock Capital.

The US activist investor is calling for a further overhaul of management and a merger with a rival platform to bolster its competitive position and Mould said it may be the prospect of further change at the firm that is supporting its share price and return to the FTSE 100.

The AJ Bell investment director pointed out that Phoenix Group, which had previously purchased assets from Axa and then Abbey Life from Deutsche Bank, has been propelled into the FTSE 100 after 2018’s £3.3bn acquisition of Standard Life Aberdeen PLC’s (LON:SLA) life assurance operations

This will be Phoenix’s first time in the FTSE 100, although in 2008 the company, then private and called Pearl, bought index member Resolution in a £5bn deal.

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Thu, 28 Feb 2019 15:12:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215547/just-eat-to-re-join-ftse-100-index-next-month-just-one-quarter-after-demotion-phoenix-group-also-gains-blue-chip-status-215547.html
<![CDATA[RNS press release - Notice of Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190222090004_13978625/ Fri, 22 Feb 2019 09:00:04 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190222090004_13978625/ <![CDATA[News - Is Uber Eats’ delivery charge cut and new marketplace just a case of playing catch up with Just Eat? ]]> https://www.proactiveinvestors.co.uk/companies/news/215045/is-uber-eats-delivery-charge-cut-and-new-marketplace-just-a-case-of-playing-catch-up-with-just-eat-215045.html News on Thursday that the food delivery arm of transport behemoth Uber, Uber Eats, will cut its delivery charge and open a marketplace to allow restaurants to make their own deliveries, has struck many as being a case of playing catch-up with its rival, Just Eat PLC (LON:JE.).

The company’s plans to cap its fees charged to restaurants at 30% of the value of an order from 35% previously, will seek to edge out competition from both Just Eat and other rival Deliveroo, but more importantly the revelation of its marketplace plan has placed it directly on a collision course with the former.

READ: Market is undervaluing Just Eat’s overseas businesses, argues UBS

The news certainly put the wind up Just Eats’ investors, with shares falling 6.6% to 685.6p in lunchtime trading, but Uber Eats’ challenge could be different from how it appears.

Is it too late?

In a note to clients, analysts at broker Liberum saw the moves as “too little, too late”, given that Just Eat had “already established a lock on much of the UK restaurant market”, with nearly two-thirds of its business coming from outside the country’s 11 biggest towns.

The broker continued that for restaurants switching to Uber Eats from Just Eat would be “too great” a risk in terms of losing customer orders, while learning a new operating system and concerns over counter space would likely prevent smaller eateries from adopting both.

Given that Just Eat has been pouring investment into its own efforts to create a network of delivery drivers, the competitive edge this brought to Uber Eats and Deliveroo is diminishing rapidly.

Or is there another motive?

While playing catch-up to the more successful competitor may seem like the obvious reason for Uber Eat’s shift in strategy as it tries to maintain market share, Just Eat’s success could have put it in the acquisition crosshairs.

“What Uber Eats move does suggest is that they recognise their model is not working and that they are not gaining share,” said Liberum’s analysts, adding that the “more likely outcome” at this point was for Uber Eats to acquire Just Eat instead.

Given that Morgan Stanley has previously valued the Uber conglomerate at a whopping US$120bn (£91.8bn), dwarfing Just Eats own current market cap of around £5bn, it would likely have more than enough firepower to take it out and integrate its operations.

Liberum’s analysts said that an added benefit of a Just Eat acquisition would be to make Uber Eats the top player in Canada, a “key strategic target” for the group.

Recent pressures may make Uber swoop more likely

The potential for a takeover by Uber may have increased recently after US hedge fund Cat Rock Capital Management, which owns a 1.7% stake in Just Eat, called on the company to explore a merger with a “well-run industry peer” rather than look for a new chief executive after boss Peter Plumb stepped aside in January.

READ: Just Eat in demand as major shareholder calls for merger talks

This, coupled with Just Eat’s slip from the FTSE 100 index in December after just one year in the blue-chips, have placed in a somewhat weak public relations position.

Liberum’s analysts said that Uber Eats would “probably wait 12-18 months” for its new initiatives to take effect, but the recent issues around Just Eat “may make now a good time to make a move”.

They added that an acquisition would make “strategic sense” for Uber Eats, given that Just Eat has nearly four times the share of the UK food delivery market as both itself and Deliveroo combined, with the gap “likely to have widened” since their figure was calculated in 2017.

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Thu, 21 Feb 2019 12:46:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/215045/is-uber-eats-delivery-charge-cut-and-new-marketplace-just-a-case-of-playing-catch-up-with-just-eat-215045.html
<![CDATA[News - Market is undervaluing Just Eat’s overseas businesses, argues UBS ]]> https://www.proactiveinvestors.co.uk/companies/news/214447/market-is-undervaluing-just-eats-overseas-businesses-argues-ubs-214447.html UBS reckons the market is drastically underestimating the value of Just Eat PLC’s (LON:JE.) overseas businesses.

According to the Swiss investment bank, based on the current Just Eat share price, the FTSE 250 group’s Latin American, Brazilian and Australian assets are worth £700mln.

This is “too pessimistic”, UBS argues, especially given that the iFood joint venture in Brazil could easily be valued at upwards of £750mln on its own.

READ: Major Just Eat shareholder calls for merger talks

“iFood has been seen as one of JE's best assets, with triple digit order growth and over 80% market share, particularly after it turned profitable in 1H18,” read a note to clients.

“We think JE share of this asset could be worth £760mln, using precedent transactions multiples, i.e. potentially 15% of the JE share price.”

Just Eat shares have taken a hit in recent months as fears grow over the impact of competition from well-funded upstarts Deliveroo and Uber Eats, while investment in logistics has dented profits.

'Trough in sight'

But after years of negative earnings per share momentum, the analysts believe “the trough is likely in sight”.

“We see multiple positive catalysts in 2019: double-digit year-on-year UK order growth, SkipTheDishes (Canada) turning profitable, and optionality from the sale of Latam assets.”

UBS trimmed its price target to 870p (from 930p) to reflect a “costlier delivery roll-out”, but it kept in place its bullish ‘buy’ recommendation.

Just Eat shares edged 0.7% higher to 735.8p in mid-morning trading on Tuesday.

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Tue, 12 Feb 2019 10:49:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/214447/market-is-undervaluing-just-eats-overseas-businesses-argues-ubs-214447.html
<![CDATA[News - Just Eat in demand as major shareholder calls for merger talks ]]> https://www.proactiveinvestors.co.uk/companies/news/214352/just-eat-in-demand-as-major-shareholder-calls-for-merger-talks-214352.html US-based hedge fund Cat Rock Capital Management has urged takeaway ordering site Just Eat PLC (LON:JE.) to explore a merger with a “well-run industry peer” rather than look for a new chief executive.

Just Eat is currently without a chief executive after former Moneysupermatket.com Group PLC (LON:MONY) boss Peter Plumb stepped aside last month following a disappointing 18-month spell in charge.

READ: Just Eat says CEO to step down

Rather than look to replace him, Cat Rock, which owns a 1.7% stake in Just Eat, has urged the board to opt for a merger instead, blaming a poor record of CEO selection in the past.

“The board’s experiment of appointing an industry outsider like Mr Plumb to the CEO role failed miserably,” Cat Rock said on Monday.

The hedge fund added that it intends to take further action ahead of May’s annual general meeting should bosses continue to ignore shareholder feedback.

It is not the first time that Cat Rock has called out Just Eat’s top brass.

Back in December, it complained that the FTSE 250 group had become the worst performing online food delivery stock in the world, with shares losing almost a quarter of their value in 2018.

Cat Rock needs support from other shareholders

“In the unlikely event of turkeys voting for Christmas and the board acquiescing to this demand, it remains to be seen just what leverage Cat Rock has,” says AJ Bell investment director Russ Mould.

“Its 1.7% stake does not carry much weight on its own and it will need to garner support from other major shareholders if it wants to force Just Eat’s hand.”

He added: “At the very least its complaint that the company has appointed executives with limited or no direct industry experience does not seem entirely unfair.

“Particularly as Just East is facing an increasingly competitive marketplace and will need forensic focus as it continues to invest in and implement its own delivery service and new technology platform.

“Interim CEO Graham Duffy is seen as a candidate for the role on a permanent basis but also fails Cat Rock’s criteria of having worked in the online food delivery space before.”

Shares were up 2% to 717.6p on Monday morning.

--Adds share price and analyst comment--

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Mon, 11 Feb 2019 08:55:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/214352/just-eat-in-demand-as-major-shareholder-calls-for-merger-talks-214352.html
<![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190131163502_13954204/ Thu, 31 Jan 2019 16:35:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190131163502_13954204/ <![CDATA[RNS press release - TR-1: Notification of major holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190131120221_13953793/ Thu, 31 Jan 2019 12:02:21 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190131120221_13953793/ <![CDATA[News - Just Eat seen as possible takeover target as takeaway delivery sector consolidates ]]> https://www.proactiveinvestors.co.uk/companies/news/212974/just-eat-seen-as-possible-takeover-target-as-takeaway-delivery-sector-consolidates-212974.html Just Eat PLC (LON:JUST) is considered a possible takeover target by some analysts as the takeaway delivery sector consolidates and as the company’s shares regain ground after a disappointing year.

The online takeaway ordering firm was booted from the FTSE 100 in the last reshuffle of the index in December after its market share fell below the £4bn minimum level required to keep its spot.

READ: Just Eat says CEO to step down as it raises 2018 guidance and expects growth in 2019

Just Eat has since recovered to a market capitalisation of £4.49bn and on Monday gave investors something to look forward to as it raised its 2018 guidance for revenues and earnings and said it expects growth in 2019.For 2018, it now expects revenue of £780mln and underlying earnings (EBITDA) of £172mln to £174mln.

In 2019, revenue is expected to reach £1bn to £1.1bn and underlying EBITDA is forecast to grow to £185mln to £205mln, supported by margin expansion and the Canadian business, SkipTheDishes, delivering its first full-year profit.

The 2019 estimates exclude the Latin American arm, iFood, which is expected to report a loss of £80mln to £100mln as it invests in improving the business. 

Just Eat could offload non-core iFood business or sell itself, says Liberum 

Analysts at Liberum said they think the deconsolidation of iFood from Just Eat's estimates will raise hopes the company will sell its stake in the business to a strategic buyer, who would focus on market potential rather than losses.

Just Eat has come under pressure from US activist Cat Rock Capital to sell non-core assets, such as iFood, to help address the company’s “significant underperformance”.

Liberum also thinks there is the possibility Just Eat could become a target for buyers, given the industry’s recent merger and acquisition activity.

“There has been recent activity in the space with Takeaway.com buying the German operations of Delivery Hero and there may be hope that Just Eat may proactively sell parts of its business or that strategic buyers may look to take advantage of the changes to make a bid for Just Eat,” they said.

Two of Just Eat’s biggest competitors – Uber Eats and Deliveroo – have reportedly been considering a merger.

READ: Disrupting the disruptor: Why an Uber and Deliveroo merger could spell the end for Just Eat

Uber Eats has reportedly tabled a £1.5bn offer for Deliveroo as the two companies face increased competition in the UK from Just Eat, which has been investing heavily in its own fleet of delivery drivers and cyclists.

Previously, Just Eat was purely a takeaway ordering website and app that connected consumers with restaurants. This meant restaurants themselves had to deal with the delivery side of things.

But Just Eat has branched out to include delivery as it attempts to fend off growing competition from Uber Eats and Deliveroo.

Just Eat said on Monday that it believes it is now “strongly positioned” to take advantage of the £83bn market opportunity in takeaway food delivery this year.

“Our unrivalled marketplace reach, combined with the roll-out of our winning delivery platform, creates a unique hybrid platform which gives our growing customer base the best of both worlds through access to more choice and better service.”

CEO departure not surprising, says AJ Bell

Alongside the trading update, Just Eat announced that chief executive Peter Plumb is stepping down after less than a year-and-a-half in the role.

The company has appointed chief customer officer, Peter Duffy, as interim chief executive while it searches for a replacement for Plumb.

Plumb said the business is in “good health” and it was the right time for him to resign and make way for a new leader.

“At first glance, remarks from Plumb that now is the right time for him to step aside seem a bit odd given the short amount of time he’s been in the role,” said AJ Bell investment director.

“However, his departure isn’t a surprise given how the company’s share price had lost upward momentum under his tenure, plus the business had come under attack from activist investor Cat Rock.”

Cat Rock, which holds a 2% shareholding in Just Eat, had complained that Plumb had yet to announce a strategic plan for the business after being in the top job for more than a year and had urged the board to change “flawed metrics” on executive pay.

While there is no reference to Cat Rock in the announcement of Plumb’s departure, Mould said “one can certainly speculate the events are linked”.

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Mon, 21 Jan 2019 12:27:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212974/just-eat-seen-as-possible-takeover-target-as-takeaway-delivery-sector-consolidates-212974.html
<![CDATA[News - Just Eat says CEO to step down as it raises 2018 guidance and expects growth in 2019 ]]> https://www.proactiveinvestors.co.uk/companies/news/212943/just-eat-says-ceo-to-step-down-as-it-raises-2018-guidance-and-expects-growth-in-2019-212943.html Just Eat PLC (LON:JE. said chief executive Peter Plumb is stepping down as the online takeaway group raised its 2018 guidance following efforts to fend off growing competition from Deliveroo and Uber Eats.  

Plumb, who has been chief executive of Just Eat since July 2017, has come under pressure from shareholders to improve returns after a disappointing year for the company’s shares that saw it fall out of the FTSE 100 in December.  

READ: US activist investors slams Just Eat for 'significant underperformance'

Just Eat has appointed chief customer officer, Peter Duffy, as interim chief executive while it searches for a replacement of Plumb.

Plumb said: "2018 was another year of strong growth for the group. The business is in good health, and now is the right time for me to step aside and make way for a new leader for the next exciting wave of growth."

Just Eat lifts 2018 guidance

Alongside the announcement, the group said it now expects revenue of £780mln and underlying earnings (EBITDA) of £172mln to £174mln for 2018.

In the company’s last trading update, published in November, it had said it expects revenue to be towards the top end of its £740mln to £770mln guidance range and underlying EBITDA to be towards the lower end of the £165mln to £185mln range, mainly due to investments in Latin American markets and its restructuring plan.

READ: Just Eat’s investment in its delivery fleet expected to dent full-year profits

Just Eat has been heavily investing in building its own network of drivers and cyclists as it looks to head off the rising threat posed by Uber Eats and Deliveroo, both of which offer a delivery service.

The firm has also added new restaurants to its marketplace, such as Gourmet Burger Kitchen, KFC and Subway.

Just Eat said 2018 has been “transformational” for the business and believes it is “strongly positioned” to take advantage of the £83bn market opportunity in takeaway food delivery this year and it accelerates delivery initiatives, particularly in the UK and Australia.  

2019 revenue and earnings expected to grow 

It expects 2019 revenue of £1bn to £1.1bn and underlying EBITDA in the range of £185mln to £205mln as it estimates margin growth and the Canadian business, SkipTheDishes, to deliver its first full year profit.

The estimates exclude the Latin American arm, iFood, which includes operations in Mexico and Brazil and is expected to report an EBITDA loss in the range of £80mln to £100mln as it invests in improving the business.  

In morning trading, shares edged up 0.7% to 663p. 

Just Eat a possible takeover target, says Liberum

Liberum said Just Eat's announcement today makes a sale of certain assets or possibly the whole company more likely.

The broker believes the deconsolidation of iFood from Just Eat's estimates will raise hopes the company will sell its stake to a strategic buyer, who would focus on market potential rather than losses.

"There has to be the possibility that Just Eat will now become a target for buyers," Liberum added.

"There has been recent activity in the space with Takeaway.com buying the German operations of Delivery Hero and there may be hope that Just Eat may proactively sell parts of its business or that strategic buyers may look to take advantage of the changes to make a bid for Just Eat."

Liberum also thinks the outlook on EBITDA is "slightly more nuanced".

"While it looks like EBITDA is in line with consensus, a counter-argument is that Just Eat is now not including its stake in iFood, which is now projected to make EBITDA losses of £80-100m for 2019E," the broker said. 

"However, our previous forecasts had assumed that iFood would make a profit so, on a like for like basis, it looks like the 'core' operations i.e. ex-Mexico and Brazil are seeing an upgrade, at least to our estimates."

Liberum reiterated a 'buy' rating and target price of 1250p on the stock.

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Mon, 21 Jan 2019 08:04:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212943/just-eat-says-ceo-to-step-down-as-it-raises-2018-guidance-and-expects-growth-in-2019-212943.html
<![CDATA[RNS press release - Board and Trading Update ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190121070006_13940441/ Mon, 21 Jan 2019 07:00:06 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190121070006_13940441/ <![CDATA[RNS press release - TR-1: Notification of major holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190117124845_13938437/ Thu, 17 Jan 2019 12:48:45 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20190117124845_13938437/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181231110002_13919331/ Mon, 31 Dec 2018 11:00:02 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181231110002_13919331/ <![CDATA[News - Investors want a bite of Just Eat as Delivery Hero sells German business to rival for US$1bn ]]> https://www.proactiveinvestors.co.uk/companies/news/211657/investors-want-a-bite-of-just-eat-as-delivery-hero-sells-german-business-to-rival-for-us1bn-211657.html Investors were hungry for Just Eat PLC (LON:JE.) shares on Friday following more consolidation in the food delivery sector.

Delivery Hero, the world’s biggest online food delivery firm, has agreed to sell its German business to rival Takeaway.com for US$1.1bn (€930mln).

READ: Just Eat to drop out of FTSE 100

It ends a long struggle for supremacy in the German market, where both sides have spent heavily to try to build market share and topple the other.

Takeaway is paying €508mln in cash, with Delivery Hero also receiving 9.5mln shares worth €422mln, giving it an 18% stake in the enlarged company.

Assuming the deal is rubberstamped by shareholders, the number of orders placed through Takeaway’s apps and site will double to 47mln a year.

Consolidation has been a key factor in the industry over the past 18 months.

Competition is intense across Europe, but analysts only expect a handful of companies to be highly profitable which has led to something of a land grab.

Just Eat, which drops out of the FTSE 100 on Monday, bought Hungryhouse from Delivery Hero for £200mln earlier this year, while Delivery Hero has itself bought assets from fellow German e-commerce player, Rocket Internet.

READ: Why an Uber and Deliveroo merger could spell the end for Just Eat

Uber Eats and Deliveroo, two relatively new businesses with plenty of financial firepower, are yet to make any significant acquisitions, opting instead to invest heavily into their own platforms.

That said, reports back in October suggested Uber was eyeing up a move for Deliveroo as it looks to take a stranglehold on the UK market.

Just Eat shares were up 4.6% to 597.8p on Friday morning.

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Fri, 21 Dec 2018 10:20:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211657/investors-want-a-bite-of-just-eat-as-delivery-hero-sells-german-business-to-rival-for-us1bn-211657.html
<![CDATA[News - City broker repeats bullish Just Eat price target; thinks shares are worth more than double ]]> https://www.proactiveinvestors.co.uk/companies/news/211391/city-broker-repeats-bullish-just-eat-price-target-thinks-shares-are-worth-more-than-double-211391.html Liberum thinks some of the criticisms levelled at Just Eat PLC (LON:JE.) by activist investor Cat Rock on Monday have some merit but is still of the opinion that bosses are broadly following the right strategy.

The City broker made its case in a research note, in which it repeated its ‘buy’ recommendation and punchy 1,250p price target – more than double the current price 578p.

US-based Cat Rock published an open letter yesterday calling for change at the online takeaway marketplace given the share price slump (-28%) so far in 2018.

READ: US activist investor slams Just Eat for 'significant underperformance'

The investor, which claims to hold 2% of the stock, put forward three main suggestions:

1. The setting of three-year financial targets with at least 20% organic revenue growth per annum and an EBITDA per order of £0.79 (the same as H1 but lower than the £0.97 of 2H17).

2. The changing of remuneration targets away from revenues and being aligned with the three-year plan.

3. The sale of the 33% stake in the iFood business in Brazil and possibly non-European assets (Liberum thinks Australia, which has come under attack from Uber Eats, is most at risk).

“Some of Cat Rock's comments have logic. For example, there is an argument that Just Eat should not have committed to pegging Marketplace (i.e. the core of the business where restaurants do their own delivery) revenue growth to growth per order, meaning the commission rate is not raised,” said analyst Ian Whittaker.

“Other food classified groups have raised the commission rate to offset the EBITDA cost of Delivery. We would also not be disappointed if Just Eat exited Australia which is somewhat unique because its high population concentration means it is vulnerable to attack.”

Whittaker thinks management has adopted the right strategy of grabbing as much of the market as possible whilst telephone still accounts for around 40% of take-out orders.

“In the medium-term, once dominance is established, Just Eat can aggressively push up margins.”

Takeover on the cards now?

Despite his backing for chief executive Peter Plumb and his team, Whittaker does acknowledge that a takeover is now more likely.

“The news raises the possibility that Just Eat is the latest of the online classified portals to be taken over / or which seeks to become private.

“Private equity interest in the space is strong with ZPG having been acquired by PE firm Silver Lake who is also rumoured to be a potential buyer for German online classified portals group Scout 24, which is reportedly exploring options.”

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Tue, 18 Dec 2018 09:27:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211391/city-broker-repeats-bullish-just-eat-price-target-thinks-shares-are-worth-more-than-double-211391.html
<![CDATA[News - US activist investors slams Just Eat for 'significant underperformance' ]]> https://www.proactiveinvestors.co.uk/companies/news/211324/us-activist-investors-slams-just-eat-for--significant-underperformance--211324.html Just Eat PLC (LON:JE) has come under attack by a shareholder demanding that the online takeaway firm address its “significant underperformance”.

US activist investor Cat Rock Capital, which holds a 2% stake in Just Eat, said the company has become one of the worst performing public equity in online food delivery.

In a letter to chairman Michael Evans and chief executive Peter Plumb, Cat Rock called on the board to offload non-core assets -- such as Brazilian online food platform iFood -- and to change “flawed metrics” on executive pay.

READ: Investors take bite out of Just Eat as it drops out of FTSE 100

“These unambitious targets and flawed incentive schemes have significantly damaged the value of the business and shareholder returns,” the investor said.

Shares in Just Eat have fallen more than 25% since the start of the year, which will see it fall out of the FTSE 100 at the next reshuffle.

Cat Rock said it was imperative that Just Eat publicly commits to an “achievable but appropriate” three-year plan to turn around the business and urged the group to link executive pay to performance.

Alex Captain, founder and managing partner of Cat Rock said: “Since Peter Plumb became chief executive in September 2017, the company’s targets have been remarkably undemanding and have created little accountability for management to execute.”

Just Eat warned on profits last month after investing heavily in a new delivery service, which includes its own network of drivers and cyclists, to help fend off competition from rivals Deliveroo and Uber Eats.

READ: Just Eat’s investment in its delivery fleet expected to dent full-year profits

In late morning trading, shares were little changed at 575p. 

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Mon, 17 Dec 2018 11:40:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211324/us-activist-investors-slams-just-eat-for--significant-underperformance--211324.html
<![CDATA[News - Investors take bite out of Just Eat as it drops out of FTSE 100 ]]> https://www.proactiveinvestors.co.uk/companies/news/210679/investors-take-bite-out-of-just-eat-as-it-drops-out-of-ftse-100-210679.html Investors took a bite out of Just Eat PLC (LON:JE.) shares on Thursday after the online takeaway marketplace dropped out of the FTSE 100 and had its price target cut by Barclays.

Shares in the soon-to-return FTSE 250 company have lost almost a third of their value of the past 12 months as Just Eat pours more money into logistics as part of its attempts to stave off competition from Deliveroo and Uber Eats.

READ: Just Eat's investment in delivery to dent full-year earnings

The increased investment has resulted in analysts having to trim their earnings forecasts by around 28%.

The share price fall means the company, now valued at £3.7bn, is no longer one of the top 100 businesses listed on the London Stock Exchange, as the minimum market cap requirement for inclusion on the FTSE 100 is £4bn – the value of last-placed Rightmove PLC (LON:RMV).

Shares fell another 5.2% on Thursday to 535.8p. Part of the reason is that some of the big funds can only invest in blue-chip firms, meaning they have now become forced sellers, driving the stock lower.

A price target cut from Barclays hasn’t helped either, although analysts are still fairly bullish on the stock.

They now think the shares are worth 785p, which is still comfortably above their current level, but represents a big climbdown from the previous target of 1,000p.

Barclays cuts estimates, target price

Barclays doesn’t expect the downturn in consumer spending to hit Just Eat as much as some have speculated, although they do think continued investment in logistics might limit earnings growth over the next couple of years.

“We see limited macro risk for Just Eat. In our view, while some customer might forego ordering takeaway food to save costs, others might trade down from higher segments to Just Eat for the same reason.”

“The underlying market place business is performing well and earnings upside/downside into the coming years will largely be driven by discretionary investments into marketing and logistics.”

They added: “To reflect updated guidance, and as we expect those investments to continue, we reduce our earnings estimates for 19/20 by [around] 16%.”

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Thu, 06 Dec 2018 12:29:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/210679/investors-take-bite-out-of-just-eat-as-it-drops-out-of-ftse-100-210679.html
<![CDATA[RNS press release - Share Purchase by Director ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181203073004_13888471/ Mon, 03 Dec 2018 07:30:04 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181203073004_13888471/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181130163503_13887678/ Fri, 30 Nov 2018 16:35:03 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181130163503_13887678/ <![CDATA[News - Liberum hikes price target for Just Eat in vote of confidence in investment strategy ]]> https://www.proactiveinvestors.co.uk/companies/news/210120/liberum-hikes-price-target-for-just-eat-in-vote-of-confidence-in-investment-strategy-210120.html City broker Liberum has hiked its price target for online takeaway marketplace Just Eat PLC (LON:JE.) to 1,250p from 850p in a vote of confidence in its investment strategy, which analysts said was the right course to gain market share early.

In a note to clients, the broker said as an online classified portal, the FTSE 100 firm “should be trying to gain as much market share as it can now to reap the benefits later”, citing the historical classified directories markets which were similar and had “very high barriers”.

READ: Just Eat’s investment in its delivery fleet expected to dent full-year profits

“The history of both the Classified Directories and online classified portals show when market leadership has been established, then margins will naturally rise. We see the same dynamic as likely to work with Just Eat”.

Analysts added that the historical example showed “just how hard it will be for competitors to break down Just Eat's position, even with deep pockets, when JE has reached optimal state”, citing the case of BT’s failed attempts to dislodge Yell as the market leader in classified directories in the early 2000s despite having “unparalleled reach in the UK” as Yell’s market dominance was too strong.

Liberum also said that as Just Eat’s platform was free for consumers and advertisers to prioritise reach and brand “deep pockets do not help” in attempts to dislodge the market dominator.

The company has seen its shares fall around 25% since the end of July over doubts around its investment strategy as it attempts to ward off rivals such as Uber Eats and Deliveroo seeking to erode its market share.

READ: Just Eat dips as doubts grow over the cost of international expansion

In its third quarter results at the start of November, Just Eat said a £60mln investment into building its own network of delivery drivers was likely to dent its full-year profits, with underlying earnings for the 12 months expected to be at the lower end of its guidance range of between £165mln-£185mln.

In the first half of the year, it spent £24mln on scaling its UK delivery operations and expects to pour in another £30-35mln over the next couple of years, up to £10mln more than it had previously indicated.

In late-morning trading on Wednesday, Just Eat shares were up 1.9% at 589.4p, a 53% discount to Liberum’s new target price.

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Wed, 28 Nov 2018 10:51:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/210120/liberum-hikes-price-target-for-just-eat-in-vote-of-confidence-in-investment-strategy-210120.html
<![CDATA[RNS press release - TR-1 Notification of Major Holdings ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181121110111_13875565/ Wed, 21 Nov 2018 11:01:11 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181121110111_13875565/ <![CDATA[RNS press release - Non-Executive Director Appointment ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181108070009_13859299/ Thu, 08 Nov 2018 07:00:09 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181108070009_13859299/ <![CDATA[News - Just Eat faces £10mln UK tax bill from Chancellor’s new digital sales tax ]]> https://www.proactiveinvestors.co.uk/companies/news/208322/just-eat-faces-10mln-uk-tax-bill-from-chancellors-new-digital-sales-tax-208322.html Online takeaway marketplace Just Eat PLC (LON:JE.) could be hit with a £10mln bill from the UK taxman if the new digital sales tax is brought in as planned in 2020.

Chancellor Philip Hammond unveiled the highly-anticipated levy on Monday as part of his Budget speech.

READ: The tax which could finally see Facebook and Amazon pay their fair share

It will see “established tech giants” – those which are profitable and generate global revenues of at least £500mln a year – slapped with a 2% tax on all sales they make in the UK.

Although Hammond didn't mention any names in his speech, the proposal was widely seen as an attack on Google, Facebook Inc. (NASDAQ:FB) and Amazon Inc. (NASDAQ:AMZN), which have for years been accused of not paying their fair share.

Unfortunately for Just Eat, it is also likely to be caught in the crossfire.

Peel Hunt reckons the FTSE 100 outfit will turn over £1.1bn in 2020, with around £0.5bn of that coming from the UK.

Pass the cost on

If those figures turn out to be correct, Just Eat faces another £10mln adding to its tax bill, which Peel Hunt thinks will bring its 2020 earnings down by 6%.

“There would be plenty of ways for Just Eat to make the tax back over the next few years through price rises and charging for things that today it gives away for free,” said the City broker in a note to clients.

“Both would either see the restaurants’ margins squeezed further or the restaurants having to put up prices, which would impact customers.”

Chinese and Indian restaurants on the decline

Peel Hunt reckons there is another issue which is arguably more important, though: the decline of Chinese and Indian restaurants in the UK.

Those two cuisines account for more than a third (38%) of Just Eat’s orders, but the number of those restaurants has fallen by 9% over the past three years (Chinese -15%, Indian -6%).

With the company reliant on those for a significant chunk of its earnings, if the decline persists, Peel Hunt warns that “it could impact Just Eat’s core business”.

Just Eat shares were up 5.3% to 639.8p in early afternoon trading on Thursday after the company reported a surge in third-quarter revenues earlier on in the day.

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Thu, 01 Nov 2018 12:10:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/208322/just-eat-faces-10mln-uk-tax-bill-from-chancellors-new-digital-sales-tax-208322.html
<![CDATA[News - Just Eat’s investment in its delivery fleet expected to dent full-year profits ]]> https://www.proactiveinvestors.co.uk/companies/news/208302/just-eats-investment-in-its-delivery-fleet-expected-to-dent-full-year-profits-208302.html Just Eat PLC’s (LON:JE.) £60mln bet on its new delivery service helped revenue surge in the third quarter, but it now expects the costly investment will dent its full-year profits.

The online takeaway marketplace has traditionally just connected consumers and restaurants, leaving delivery to the restaurants themselves.

READ: Why ‘Uberoo’ could spell the end for Just Eat

But recently it has been investing heavily into building its own network of drivers and cyclists as it looks to head off the growing threat posed by Uber Eats and Deliveroo, both of which offer a delivery service.

Just Eat has been hard at work getting chains such as Gourmet Burger Kitchen, KFC and Subway on board, while Papa John’s has also outsourced some of its delivery services to the FTSE 100 group.

In the first half of the year, it spent £24mln on scaling its UK delivery operations and expects to pour in another £30-35mln over the next couple of years, up to £10mln more than it had previously indicated.

The increased investment was announced back in July, although it repeated its full-year underlying earnings guidance of between £165-185mln at that time.

Earnings to be at lower end of forecasts

However, in a third-quarter trading update today (Thursday), the £4bn company said it now expected underlying earnings for 2018 to be at the lower end of that range.

The investments are making an incremental difference to the top-line though, with Just Eat guiding for revenue to be towards the upper end of its £740-770mln range.

“Our delivery expansion plans are on track, ensuring we give customers exactly what they want, and I'm very pleased with the progress we are making against our strategic objectives,” said chief executive Peter Plumb.

What heatwave?

The benefit was seen in the company’s third-quarter results, with revenue surging 41% to £195.3mln, a figure which was also boosted by the inclusion of Hungryhouse.

Almost 55mln orders were placed with takeaways through Just Eat’s marketplace, with 57% of those coming through its app.

Analysts had expected the group’s UK performance to be affected by the “exceptionally hot” summer, but Just Eat said a strong September, when it recorded its first-ever weekend with over 1mln orders, helped to offset some of the impact in its home market.

“The group has delivered another strong quarter as we helped our 97,000+ restaurant partners serve over 54mln takeaways to millions of hungry customers,” added CEO Plumb.

“Our increased investments in delivery, brand and data are already taking the Just Eat brands to more customers, making it easier for them to order from a widening choice, ensuring their takeaway moments are even more enjoyable.”

Increased investment is just the right approach

Liberum analyst Ian Whittaker thinks Just Eat is adopting the right approach by re-investing heavily into its operations.

He notes that, unlike property or car classified ads, the online food delivery market is still relatively young, with phone orders or walk-ins still accounting for the majority of sales.

“While Just Eat is the market leader in nearly all the markets in which it operates, the food delivery market has not fully transformed yet from phone to online and so the emphasis should be on growing share and growth generally,” he wrote in a note to clients.

Shares were volatile in early trading but have since settled and were up 5.4% to 640.4p shortly before midday.

--Updates for analyst comment and share price--

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Thu, 01 Nov 2018 08:15:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/208302/just-eats-investment-in-its-delivery-fleet-expected-to-dent-full-year-profits-208302.html
<![CDATA[RNS press release - Q3 2018 Results ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181101070005_13850447/ Thu, 01 Nov 2018 07:00:05 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181101070005_13850447/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181031163501_13850124/ Wed, 31 Oct 2018 16:35:01 +0000 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181031163501_13850124/ <![CDATA[News - Disrupting the disruptor: Why an Uber and Deliveroo merger could spell the end for Just Eat ]]> https://www.proactiveinvestors.co.uk/companies/news/208025/disrupting-the-disruptor-why-an-uber-and-deliveroo-merger-could-spell-the-end-for-just-eat-208025.html City broker Peel Hunt thinks Just Eat PLC’s (LON:JE.) move into delivery might be too little, too late in the face of growing competition from its loaded and more innovative rivals.

The online food marketplace has historically connected consumers with takeaway food restaurants, leaving the restaurants themselves to deal with the delivery side of things.

But it has recently branched out to include delivery, boosting its addressable market from £16bn to £57bn as it takes the fight to Uber Eats and Deliveroo, both of which already offer this service.

Should have moved sooner

Although they call it a “sensible” move, Peel Hunt analysts think Just Eat might have missed the boat.

They argue that it should have snapped up a Deliveroo comparator called Take Eat Easy back in 2016, back when the delivery market was in its infancy and TEE was looking for investment.

“Despite hitting its one-millionth order the week before, [Take Eat Easy] had to cease trading because there were no takers [willing to invest], most likely due to the fear of Deliveroo’s big pockets,” noted Peel Hunt.

“Had Just Eat acquired it, we may be in a different position today.”

READ: Just Eat off the menu on Deliveroo-Uber merger reports

Importantly, the belated move into delivery will hit Just Eat’s margins at a time when its rivals’ will be improving as their prior investments begin to pay off.

Even if it does make a decent fist of things at first, Peel Hunt said it would expect Deliveroo and Uber Eats to just ‘out-invest’ Just Eat and blow it out of the water.

That’s the big problem for Just Eat right now; not only is it playing catch-up, but it lacks the kind of innovation and deep pockets which its two major rivals are famed for.

Uber and Deliveroo more innovative

At the moment, a real sticking point for the industry is only being able to deliver food to a set address (i.e. 10 Downing Street).

The impulsive nature of a takeaway means that any company which could deliver food to a park, for example, could open up a new and lucrative market.

“We have stronger confidence in ‘Uberoo’ fixing this problem, with Uber already doing that within its taxis app,” read the analysts’ note to clients.

On top of that, the number crunchers also highlight Deliveroo’s Editions concept as another example of innovation, while the Uber Eats app is now more popular than Just Eat’s on Apple’s UK App Store.

Uber can push food offering to customers

Part of the reason for Uber Eats’ popularity is that it is riding on the coattails of its parent company, Uber, which is consistently one of the most downloaded apps in the UK and around the world.

Given that us Brits consume an unhealthy amount of takeaway food after a night out, Peel Hunt suggests that Uber could start pushing its Eats offering to customers during their trip home.

It describes this as “monetisation of a very captive audience and something that Just Eat cannot do”.

The analysts don’t expect Deliveroo to be left behind though, claiming its huge investments – it spent an extra £102mln on its product last year – will make sure it keeps pace.

Deliveroo’s move into the high-margin marketplace model, Just Eat’s bread and butter, should boost profitability, allowing it to invest even more into its offering. Uber is also entering this space, crowding the market even further.

The end for Just Eat?

Last month, speculation was rife that Uber was looking to take out Deliveroo and use it to beef up its own platform which would really take the fight to Just Eat.

Uber boss Dara Khosrowshahi has refused to pour cold water on those claims as well. When asked last week if he was planning on making a move for Deliveroo, he told journalists: “Who knows?”

Should a deal manage to get done – and you’d think competition regulators might have something to say about it – Peel Hunt’s number crunchers reckon it could spell the end for Just Eat.

Heck, they’re not convinced the FTSE 100 group will be even if a merger doesn’t happen.

“Prompted by rumours surrounding Uber and Deliveroo, we postulate that the two of them (merged or otherwise, let’s call them Uberoo), around the world, could create an Uberoo-esque wave that eventually sees the demise of Just Eat,” the analysts concluded.

“Both are capable of out-investing Just Eat in delivery and are entering the more lucrative marketplace sector.”

Just Eat now a ‘sell’

Having been a long-time bull of the stock, Peel Hunt has reversed its view entirely, sticking a ‘sell’ recommendation on Just Eat and slashing its target price to 520p from 950p previously.

The analysts have also chopped their forecasts, lowering its revenue estimates for the next three years by around 6% and underlying earnings (EBITDA) estimates over the same timeframe by roughly 9%.

Just Eat shares are down 3.7% to 579.6p in mid-morning trade on Monday.

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Mon, 29 Oct 2018 11:05:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/208025/disrupting-the-disruptor-why-an-uber-and-deliveroo-merger-could-spell-the-end-for-just-eat-208025.html
<![CDATA[RNS press release - BLOCK LISTING SIX MONTHLY RETURN ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181005163501_13818969/ Fri, 05 Oct 2018 16:35:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181005163501_13818969/ <![CDATA[RNS press release - Block listing shares - Just Eat Sharesave Scheme ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181003120001_13815123/ Wed, 03 Oct 2018 12:00:01 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20181003120001_13815123/ <![CDATA[RNS press release - Total Voting Rights ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180928163503_13809717/ Fri, 28 Sep 2018 16:35:03 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180928163503_13809717/ <![CDATA[News - Just Eat will be just fine even if Uber snaps up Deliveroo, say City analysts ]]> https://www.proactiveinvestors.co.uk/companies/news/205435/just-eat-will-be-just-fine-even-if-uber-snaps-up-deliveroo-say-city-analysts-205435.html Just Eat PLC’s (LON:JE.) problems are well-documented: it lacks the kind of delivery service offered by some of its peers and competition is becoming fiercer.

The online takeaway marketplace operates a delivery service for just a couple of big chains, such as Burger King and KFC, and it has only started doing that within the last year.

Generally, it acts as the middleman, taking the order from the customer and passing it onto the restaurant, which is then responsible for delivering the food.

READ: Just Eat off the menu on reports of Uber-Deliveroo tie-up

By contrast, Deliveroo and Uber Eats not only take the orders through their platforms, but they also have a network of bikes and scooters which deliver the takeaway too. All the restaurant has to do is prepare the food.

That gives the latter two, a leg up when it comes to adding big names – Pizza Express, GBK, Frankie & Benny’s et al – to its platform.

The additional service has helped Deliveroo and Uber Eats eat into Just Eat’s market share in recent years, while it moved recently to take out another of its main competitors, Hungryhouse.

A tie-up between its two biggest remaining rivals, then, as rumoured today, would be bad news for Just Eat, right?

Wrong, say analysts, who reckon Uber’s reported approach for Deliveroo – worth “several billion”, apparently – won’t actually have a material impact on Just Eat’s business.

Liberum number cruncher and long-time Just Eat bull Ian Whittaker has given three reasons why he thinks the FTSE 100 group will be “reasonably comfortable”, even if a deal does go through at some point.

Market cornered in smaller towns

“Just Eat has already grabbed a considerable share (1/3 of the UK market, for example) and, like any classifieds business (which is what this is), once you are a market leader and entrenched with customers, you are extremely hard to dislodge,” wrote Whittaker in a note to clients.

He concedes that Deliveroo and Uber Eats have been making gains in the bigger cities across the UK, but claims this is almost irrelevant, given that two-thirds of Just Eat’s customers are in “second tier” towns “where Uber and Deliveroo are naturally weaker”.

His final point concerns what the Uber-Deliveroo group would look like and says there will be “an interesting decision” for bosses to make with regards to rebranding.

“We would imagine Uber would want to rebrand Deliveroo as Uber Eats but, typically, that presents a risk that restaurants/consumers churn off during the rebranding.”

First mover advantage

Whittaker’s counterpart over at fellow City broker Peel Hunt, James Lockyer, agrees that Just Eat’s first mover advantage means it is well-placed to deal with the “enormous pressure” an Uber-Deliveroo partnership would put on it.

“We believe Just Eat's buying power to get discounts for its restaurants, its invaluable big data assets, and the large swathe of customers that use and continue to use the platform is still a huge barrier to entry for the smaller players,” said Lockyer.

He did, however, note that the competitor could cause a few troubles for Just Eat outside of its home UK market, most notably Australia.

Just Eat shares were down 5.4% to 669.8p on Friday afternoon.

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Fri, 21 Sep 2018 12:35:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/205435/just-eat-will-be-just-fine-even-if-uber-snaps-up-deliveroo-say-city-analysts-205435.html
<![CDATA[News - Just Eat off the menu on reports Uber wants to gooble up Deliveroo ]]> https://www.proactiveinvestors.co.uk/companies/news/205420/just-eat-off-the-menu-on-reports-uber-wants-to-gooble-up-deliveroo-205420.html Just Eat PLC (LON:JE.) was under pressure on a report that rival delivery service Deliveroo is in the sights of ride-hailing app group Uber.

Bloomberg reported that Uber has started talks about a potential takeover, though these were at an early stage with Deliveroo’s management and investors said to be reluctant. Uber has been pushing its own food delivery plans hard ahead of its planned IPO next year and Deliveroo would instantly add scale in Europe to the Uber Eats operation.

A funding round in 2017 valued Deliveroo at more than US$2bn but any bid would have to be pitched much higher to have a chance of success, said the report. Deliveroo now operates in eleven countries and in more than 100 cites.

Food delivery a priority

Uber chief executive Dara Khosrowshahi is said to have prioritised food delivery as a growth part of the business.

Just Eat shares dropped 7% to 662p on the report.

Analysts had already been trimming price targets for the delivery app due to the increased competition especially from both Uber and Deliveroo.

Just Eat’s delayed move into delivery services means the group’s core customer base is still very much skewed towards the lower-price segment, JP Morgan analyst Marcus Diebel said recently.

Diebel said this brings “strategic disadvantages”, including the fact that the high to mid-price segment demands delivery and is already taken by first movers, Deliveroo and UberEATS, which are strongly gaining share outside London.

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Fri, 21 Sep 2018 09:10:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/205420/just-eat-off-the-menu-on-reports-uber-wants-to-gooble-up-deliveroo-205420.html
<![CDATA[RNS press release - Director/PDMR Shareholding ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180920073004_13797937/ Thu, 20 Sep 2018 07:30:04 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180920073004_13797937/ <![CDATA[RNS press release - Director Share Awards ]]> https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180905073005_13779289/ Wed, 05 Sep 2018 07:30:05 +0100 https://www.proactiveinvestors.co.uk/companies/rns/8332/LSE20180905073005_13779289/