Will Just Eat Feel The Pinch Of The Takeaway Wars From FY Results?
Spreadex | Feb 27, 2019 11:45
2018 wasn’t a great one for the delivery service. The company was all over the place in the first half of the year, veering between £7 and £9, only to settle into a sharp decline in the back end, finishing up December at £5.90. That collapse was enough to see it booted out of the FTSE 100, just over 12 months after it joined.
Like many stocks, it had rebounded since the start of 2019 – this despite some worrying developments, like Uber Eats reducing the fees it charges restaurants – with Just Eat (LON:JE) PLC now at a current trading price of £7.27.
Lasting only a smidge longer than the firm’s blue chip index tenure was CEO Peter Plumb, who left the company with immediate effect on January 21st after just 18 months at the helm. The main sticking point was the slow return on investment regarding the launch of Just Eat’s own delivery service to rival Uber Eats and Deliveroo, something investors had expressed their displeasure with throughout 2018.
The company mitigated the shock of that departure with some better than expected full year forecasts. Revenue is set to come in nearly 43% higher year-on-year to £780 million, while underlying core earnings of £172 million to £174 million would be a 5.5% increase at the mid-point, a dramatic slowdown from the 42% growth managed in 2017. As for 2019, Just Eat is expecting revenue in the range of £1 billion to £1.1 billion, and underlying EBITDA between £185 million and £205 million.
More so than its figures, investors will be interested in its CEO search, with Peter Duffy currently filling in as interim chief. Some shareholders want something altogether different, however, with activist investor Cat Rock Capital demanding a merger with another online food delivery company in the next few months due to Just Eat’s ‘poor record of CEO selection’.
Just Eat PLC has a consensus rating of ‘Buy’ alongside an average target price of £8.83.
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