City analysts were divided on Deliveroo PLC (LSE:ROO) stock following the food-delivery company’s first-quarter financial results.
International order growth was a highlight in the company’s earnings, though the revenue take rate was largely underwhelming.
Panmure Gordon analyst Sean Kealy noted that gross transaction value (GTV) was “ahead of consensus with international delivery growth “above expectations”.
Healy outlined a few bullish theses for the stock following the results.
“We continue to see three routes for the company to deliver for investors: Through profitable growth, through its potential acquisition post-conversion of the CEO’s class-B shares earlier this month, and through its potential index inclusion in the FTSE 250 later this year.”
Deliveroo would need to apply for a premium listing for inclusion in the FTSE 250 index; something made easier by chief executive Will Shu’s golden shares expiring last week.
Removal of Shu’s blocking stake – which gave him the power to vote against any potential takeover – has naturally raised the possibility of Deliveroo becoming a takeover target, Kealy pointed out.
On the prospect of these developments, Panmure has a 'buy' rating on the stock with a 190p share price
But Shore Capital Markets sees better value elsewhere. Specifically, Just Eat has an 8x forward enterprise value to EBITDA valuation against Deliveroo’s considerably higher 18x valuation.
Domino’s Pizza represents another food delivery play with an 11x EV/EBITDA valuation, said ShoreCap.
On that basis, analysts at the brokerage contradicted Panmure with a 'sell' rating at the current 121p share price.
Yet Deliveroo’s “performance all things considered was slightly better than we anticipated”, said Shore Cap, though market share losses in the UK and Ireland against Just Eat “could be slightly disappointing for investors”.
Jefferies, meanwhile, called the results “solid… driven by a strong improvement in international with contributions from France, UAE and Hong Kong.
The bank has a buy rating with a 205p price target.