Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) shares tumbled 6.5% on Wednesday despite its guidance and earnings beating market expectations, leaving analyst’s opinions in direct conflict with the market mood.
Analysts believe the drop was due to the lack of share buyback announcements in the takeaway company's full-year results.
Just Eat also said it would be increasing its investment in marketing, prices and capital expenditure while it avoided offering information on order growth.
Nevertheless, Shore Capital remains a buyer, pointing out its low valuation despite the fact the group is expected to double its profits between 2022 and 2024.
“We view a business inflecting to order growth whilst driving profit growth through cost efficiencies and offering customers lowest-in-class fees on LfL orders,” Shore Capital said, justifying its ‘buy’ rating.
Guidance for 2024 was “slightly ahead of consensus” with underlying earnings in 2024 expected to reach €450 million, ahead of market forecasts of €430 million.
During 2023, underlying earnings reached €320 million, beating predictions, partly due to the group’s decision to switch from an employment model to a contractor framework in the UK and Ireland.
“We see just under a quarter of the UK delivery model still to flip to contractor and expanding geographic coverage of JET’s logistics brand in Northern Europe as key drivers of the step-up in GTV and EBITDA,” Shore Capital concluded.
The broker targets a 2,100p share price, with shares currently trading at around 1,200p.