Deliveroo PLC (LSE:ROO) was a rare flash of green on a day of red in global stock markets, pedalling 3% higher after Barclays upgraded its rating and set out six reasons to own the stock.
Moving to an ‘overweight' stance on the shares, the reasons set out by the bank's analysts were as follows:
- growth should improve in 2024
- mid-term margin upside is seen
- M&A upside once founder Will Shu's special class B shares are due to expire in April
- possible cash returns
- valuation support on free cash flow basis
- and FTSE 250 inclusion once the class B shares are gone.
While accepting there are risks, the analysts view Deliveroo as a story with catalysts, earnings momentum and M&A 'optionality' for 2024.
It has a set a price target of 155p, up from 145p.
Potential catalysts were flagged as the trading update this Friday, and annual results in March.