In a note, the investment bank said the firm’s UK market remained its most “significant share price driver”, but order growth in the territory had slowed to 7% in its latest first quarter from 13% in the fourth quarter of 2018.
Analysts said high exposure to “less attractive” eateries, cannibalisation from delivery restaurants that had signed up to its platform and poor tech execution had all taken their toll on the FTSE 100 takeaway firm.
“We expect order growth for the UK to remain subdued going forward and materially reduce our UK valuation from £2.3bn to £1.7bn”, the bank said as it slashed its target price to 682p from 822p.
JP Morgan added that while mergers and acquisitions were “a risk”, they saw “limited appetite” for any large scale disposals among Just Eat’s shareholders.
The assessment left a bad taste in the mouth for investors, with shares slipping 2.5% to 681.4p in late-morning on Wednesday.
Warm weather blamed for sub-par performance
The downgrade followed Just Eat's first quarter results last week, where the company blamed February’s warm weather after it missed expectations across the board, prompting fresh fears over the threat of Uber Eats and Deliveroo.
The number of orders placed through the company’s online takeaway marketplace increased by 21% year-on-year in the three months ended 31 March. Revenue jumped by almost a third to US$227.9mln.
But City analysts had forecast order growth of closer to 25%, with sales tipped to come in at US$234mln.
The performance in the UK, which accounts for more than half of the business, was particularly bleak as orders edged 7.4% higher – the weakest first-quarter growth on record.
Analysts had always expected a slight deceleration in growth, although their estimate of a 13% jump in orders was missed.