Deliveroo is the ‘top pick’ among analysts at Jefferies, who expect gross transaction value (GTV) growth in the second quarter of this year.
Analysts were bullish on the food delivery service’s “market share momentum in key markets, its leadership on advertising and its best-in-class balance sheet quality and free-cash-flow generation.”
Jefferies said that despite slowing growth so far this year across the food delivery sector, Deliveroo has outperformed against peers, especially in the UK, which is “validation of its leadership on strategy and execution.”
“Deliveroo’s pitch-perfect strategy on grocery and dark stores, wrapped up in the Plus programme, makes it hardier in the face of a weaker consumer,” the broker said.
Advertising momentum “looks good” since the launch of the campaign last June, which is believed to have contributed to 0.6% of GTV in the fourth quarter of last year.
A target price of 170p was set by the broker.