Stifel Begins Coverage of European Online Delivery Stocks

Stifel has started coverage on two prominent online delivery companies in Europe, Delivery Hero and Just Eat Takeaway, as part of a comprehensive assessment of the online food delivery sector.

This initiative comes at a pivotal moment when the industry is shifting from years of rapid growth, often termed “Blitzscaling,” to prioritizing profitability and market leadership.

Both companies have altered their strategies, with management focusing on optimizing their portfolios by divesting from less profitable markets and solidifying their positions in key regions.

Stifel has expressed a strong preference for Delivery Hero, issuing a “buy” rating with a price target of €60. The company’s significant growth potential, particularly in its main markets such as South Korea and the Middle East, is highlighted by its effective portfolio management, which includes strategic actions like the planned IPO of talabat in the fourth quarter of 2024. These initiatives are expected to enhance shareholder value.

Conversely, Just Eat Takeaway received a more cautious “hold” rating, with a price target of €14.80. Although the company has made progress in improving margins, particularly in Northern Europe, its overall growth trajectory lags behind competitors, and there are currently no immediate catalysts that could trigger a reevaluation of its prospects.

According to Stifel, both companies have encountered difficulties in sustaining profitability amid intense competition, yet the long-term outlook for the sector remains optimistic as firms begin to experience the advantages of market leadership and operational efficiency.

Delivery Hero’s pullback from less profitable areas such as Taiwan and Vietnam, along with Just Eat Takeaway’s withdrawal from New Zealand and France, reflects a broader trend toward consolidation within the industry.

Nevertheless, competition from global players such as major delivery services, as well as emerging contenders, poses ongoing challenges.

Analysts have also highlighted the potential for future mergers and acquisitions, which could further alter the competitive landscape. Stifel pointed out that significant deals, like the rumored acquisition of Deliveroo by another major player, could disrupt markets such as the UK and Ireland, impacting Just Eat Takeaway’s standing.