Deliveroo PLC (LSE:ROO) shares might have stumbled on results day, but Deutsche Bank reckons the market has got it wrong. The bank has reiterated its ‘Buy’ rating, arguing there’s still 50% upside from current levels, with a new price target of 175p.
The upgrade provided a much needed tonic for the share price, which hopped 4% higher to 124.1p.
The food delivery firm’s full-year results earlier in the week confirmed two major milestones: its first-ever net profit and positive free cash flow. Adjusted earnings jumped 52% to £130m, and a fresh £100m share buyback – around 5% of its market cap – was unveiled.
Investors, however, focused on the cautious outlook, fretting over increased investment and stiff competition. That led to a sell-off, but Deutsche thinks this is short-sighted. Deliveroo has been shifting towards a more financially sustainable model, balancing growth with profitability.
While competition remains fierce, the company’s expansion into groceries and retail, plus its push for stronger customer retention, suggests it’s in a solid position. Deutsche’s takeaway? The long-term growth story is intact, and the current valuation looks like a bargain.