Shares in the soon-to-return FTSE 250 company have lost almost a third of their value of the past 12 months as Just Eat pours more money into logistics as part of its attempts to stave off competition from Deliveroo and Uber Eats.
The increased investment has resulted in analysts having to trim their earnings forecasts by around 28%.
The share price fall means the company, now valued at £3.7bn, is no longer one of the top 100 businesses listed on the London Stock Exchange, as the minimum market cap requirement for inclusion on the FTSE 100 is £4bn – the value of last-placed Rightmove PLC (LON:RMV).
Shares fell another 5.2% on Thursday to 535.8p. Part of the reason is that some of the big funds can only invest in blue-chip firms, meaning they have now become forced sellers, driving the stock lower.
A price target cut from Barclays hasn’t helped either, although analysts are still fairly bullish on the stock.
They now think the shares are worth 785p, which is still comfortably above their current level, but represents a big climbdown from the previous target of 1,000p.
Barclays cuts estimates, target price
Barclays doesn’t expect the downturn in consumer spending to hit Just Eat as much as some have speculated, although they do think continued investment in logistics might limit earnings growth over the next couple of years.
“We see limited macro risk for Just Eat. In our view, while some customer might forego ordering takeaway food to save costs, others might trade down from higher segments to Just Eat for the same reason.”
“The underlying market place business is performing well and earnings upside/downside into the coming years will largely be driven by discretionary investments into marketing and logistics.”
They added: “To reflect updated guidance, and as we expect those investments to continue, we reduce our earnings estimates for 19/20 by [around] 16%.”