Deliveroo PLC (LSE:ROO) will provide a fourth-quarter trading update next Thursday where investors will hope it found a way to mitigate slower growth as industry research indicates a decrease in food deliveries last year.
For the wider UK delivery industry, sales in November were down 1% compared to a year earlier, research by CGA showed, which was the 12th month in a row that the delivery sector sales were down year-on-year as demand levels out following the pandemic surge.
The takeaway sector was still almost double the size of pre-pandemic levels, the data showed, with deliveries making up around a fifth of major restaurant groups’ business.
The FTSE 250-listed online food delivery company had already lowered guidance for full-year underlying profits at the time of its third-quarter update in October, before closing down operations in Australia the month after.
Its share price has fallen by more than 45% over the past year, a trend echoed by rivals Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB), down 46%, and Delivery Hero (ETR:DHER, OTCQX:DLVHF), down 39%.
“Deliveroo remains an under-appreciated equity, in our view. It has consistently led on strategy, which is now leading to leadership on growth (especially in the UK),” analysts from Jeffries stated.
“With the Australia exit, Deliveroo has now jettisoned the last of its problematic markets while accelerating its path to profitability,” they added.
Jeffries target a £1.55 share price and rates the stock a “buy”, versus Deliveroo currently trading at 93p, up 1.8% today.