On Friday, Delivery Hero SE (DHER:GR) (OTC: DLVHF) received a Neutral rating from Redburn-Atlantic, with a price target set at €22.00. The firm commenced its coverage on the food delivery company, projecting a 13% annualized return by the end of 2025.
The company, known for its food delivery services, holds strong market positions in the Middle East and certain European regions. Despite this, Redburn-Atlantic pointed out concerns regarding Delivery Hero's balance sheet, which could make it vulnerable to competition. Competitors like Meituan in the Middle East and DoorDash (NASDAQ:DASH) in Europe may limit Delivery Hero's potential for margin expansion and growth.
Redburn-Atlantic also noted that while portfolio rationalization could solidify Delivery Hero's business, it might not be enough to significantly drive the stock's performance higher. The firm's analysis suggests that such measures could help maintain the company's current market position but are unlikely to contribute to substantial growth in the near term.
Delivery Hero's presence in key markets is acknowledged, yet the firm's financial strategies and competitive landscape are seen as factors that could influence its future success. The €22.00 price target reflects these considerations and the expected returns for investors by the end of 2025.
In summary, Redburn-Atlantic's initiation of coverage on Delivery Hero SE presents a cautious outlook, with the Neutral rating indicating that the firm does not foresee significant stock movement in either direction in the immediate future. The €22.00 price target is based on the company's current market strengths balanced against the challenges it may face from competitors and financial constraints.
InvestingPro Insights
In light of Redburn-Atlantic's neutral stance on Delivery Hero SE (DHER:GR), it's worth considering additional insights from InvestingPro. With a significant debt burden and a stock that has fared poorly over the last month, Delivery Hero's financial position appears to be under pressure. The InvestingPro Tips highlight that the stock is currently in oversold territory, which could suggest a potential rebound or at least some level of support at current prices. Additionally, analysts do not expect the company to be profitable this year, which aligns with Redburn-Atlantic's concerns about the company's balance sheet.
From a data perspective, Delivery Hero's market capitalization stands at $5.84 billion, reflecting its substantial size in the food delivery market despite recent challenges. The negative P/E Ratio of -2.21 and adjusted P/E Ratio of -3.01 for the last twelve months as of Q4 2023 underlines the company's current lack of profitability. Moreover, the stock's price has declined significantly over the last year, with a 53.81% drop, which could be a reflection of the competitive and operational hurdles the company is facing.
The company's revenue growth remains a bright spot, with a 15.91% increase over the last twelve months as of Q4 2023, indicating that while profitability is an issue, the company is still expanding its top-line figures. This could be a sign of potential for future profitability if Delivery Hero can translate revenue growth into bottom-line results.
Investors interested in a deeper dive into Delivery Hero's financial health and future prospects can find additional InvestingPro Tips by visiting https://www.investing.com/pro/DHER. There are 6 more tips available that could provide valuable insights into the company's performance and stock valuation. For those considering an InvestingPro subscription, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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