Three years on from what was widely panned as the worst IPO in London’s history and Deliveroo PLC (LSE:ROO)'s investment case is starting to materialise, according to analysts at City broker Panmure Liberum.
Panmure highlighted Deliveroo's strong first-half performance, which saw the food-delivery company log its first-ever interim profit and an EBITDA beat that outpaced consensus expectations by 12%.
Deliveroo’s growth in orders, especially in the UK, has been a bright spot, outstripping the performance of competitors like Just Eat Takeaway, said Panmure.
“Following the £150m share buyback announced with these results, that pillar of our investment case has materialised.
“With the (London Stock Exchange’s) listing rules also now having changed, FTSE 250 entry could be on the table very soon, presenting the next likely upside scenario for the stock.”
The Financial Conduct Authority unveiled the biggest upheaval to the UK’s listing rules in 30 years in July in an attempt to revitalise plummeting global interest in the Square Mile.
Panmure sees the stock as a buy with a 190p target price.
Currently trading at 147.3p a share, Deliveroo remains 48% lower from its March 2021 debut price.
It is valued at £2.4 billion, which puts it in the upper quadrant of FTSE 250-listed firms in terms of valuation, but its standard listing has previously prevented it from inclusion.
Historically, only companies with premium listings qualify for inclusion in the FTSE indexes. However, under the FCA’s new rules, these two segments will be scrapped in favour of a solitary, less stringent listing regime.
The next FTSE reshuffle will happen in September, with notice of membership changes scheduled for the fourth.