Just Eat shares jump as Jefferies hails huge potential
Jefferies initiates coverage with 'buy' rating
Just Eat shares surged on Wednesday after Jefferies initiated coverage of the stock with a 'buy' rating.
The broker said that the recently-listed online takeaway delivery marketplace "demonstrates the clearest valuation upside in our UK digital peer group".
It believes that the company's many-to-many network business model serves an "underpenetrated and material market opportunity around online takeaway food", and has the potential to drive "super-normal margins".
Just Eat shares surged on Wednesday after Jefferies initiated coverage of the stock with a 'buy' rating.
The broker said that the recently-listed online takeaway delivery marketplace "demonstrates the clearest valuation upside in our UK digital peer group".
It believes that the company's many-to-many network business model serves an "underpenetrated and material market opportunity around online takeaway food", and has the potential to drive "super-normal margins".
According to Just Eat, the total addressable market (TAM) for online takeaway is estimated to be around £60bn.
"In the UK market, we estimate annual spend at some £6.5bn, growing at 6% per annum. 2013 order driven revenues suggests just 8% penetration," Jefferies said.
The broker forecasts Just Eat to deliver an "impressive" 86% compound annual growth rate in earnings over 2013 to 2016.
Jefferies gave a 450p target price to the stock, representing substantial upside from Wednesday's price of 288.6p, which was 7.3% higher on the day.