On Wednesday, Stifel initiated coverage on Delivery Hero (DHER:GR) (OTC: DLVHF), setting a Buy rating with a price target of €60.00. The firm highlighted Delivery Hero's status as one of the top online food delivery operators worldwide, with operations in approximately 70 countries and a Gross Merchandise Value (GMV) of around €45 billion for the fiscal year 2023.
Stifel's analysis suggests that Delivery Hero's strategic shift to prioritize profitability could reveal the company's business model value, projecting an adjusted EBITDA margin of 2.8% and a free cash flow yield of about 6% by the fiscal year 2026 estimates.
The firm anticipates that portfolio rationalization could lead to a cash inflow of approximately €2.3 billion by the end of fiscal year 2025, which would substantially strengthen the balance sheet and potentially increase Delivery Hero's equity value by roughly €8 per share.
According to Stifel, Delivery Hero currently trades at a discount compared to its global peers. The firm expects this gap to narrow significantly as the company's growth accelerates and its financial health improves.
The valuation of Delivery Hero by Stifel is based on a blended approach, including peer group-derived enterprise value-to-sales and enterprise value-to-EBITDA target multiples, as well as a discounted cash flow analysis with a weighted average cost of capital (WACC) of 9.9% and a terminal growth rate (TGR) of 3.0%.
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