Stifel Analyzes Delivery Hero: Promising Financial Outlook Ahead
Stifel's Buy Rating on Delivery Hero
Recently, Stifel began its coverage of Delivery Hero (DHER:GR) (OTC: DLVHF) with an optimistic Buy rating and set a price target of €60.00. This recognition highlights Delivery Hero's prominent role in the global online food delivery market, where it operates in around 70 countries, generating a Gross Merchandise Value (GMV) nearing €45 billion for the current fiscal year.
Strategic Focus on Profitability
Stifel's research indicates that Delivery Hero is actively shifting its focus towards enhancing profitability. This strategic adjustment is anticipated to unveil the true value of the company’s business model. Projections indicate an adjusted EBITDA margin of 2.8% and a free cash flow yield of approximately 6% by 2026.
Potential Cash Inflow and Strengthened Balance Sheet
Stifel suggests that rationalizing its portfolio may lead to a substantial cash inflow, estimated at around €2.3 billion by the conclusion of 2025. Such a move would notably bolster Delivery Hero's balance sheet and likely uplift its equity value by an estimated €8 per share.
Comparative Valuation Insights
Current market conditions reveal that Delivery Hero is trading at a price lower than many of its global competitors. Stifel forecasts that as Delivery Hero's growth picks up and its fiscal health strengthens, this valuation gap will decrease significantly.
Valuation Methodology Details
The valuation put forth by Stifel employs a multifaceted approach. This includes analyzing the enterprise value-to-sales ratio and enterprise value-to-EBITDA ratios derived from peer groups, alongside a discounted cash flow analysis. The weighted average cost of capital (WACC) is set at 9.9%, while a terminal growth rate (TGR) is placed at 3.0%.
Conclusion: A Bright Future for Delivery Hero
Given these insights, it’s evident that Stifel views Delivery Hero as positioned for future growth, with significant potential for improved margins and a healthier balance sheet. Investors keeping an eye on emerging opportunities in the food delivery sector may want to consider these developments seriously.
Frequently Asked Questions
What is Stifel's price target for Delivery Hero?
Stifel has set a price target of €60.00 for Delivery Hero's stock.
In how many countries does Delivery Hero operate?
Delivery Hero operates in approximately 70 countries worldwide.
What EBITDA margin is projected by Stifel for Delivery Hero?
Stifel projects an adjusted EBITDA margin of 2.8% by the fiscal year 2026.
What is the estimated cash inflow from rationalization?
Stifel estimates that rationalization efforts could yield around €2.3 billion in cash inflow by the end of fiscal year 2025.
How does Delivery Hero's valuation compare to its competitors?
Delivery Hero is currently trading at a discount compared to its global peers, a situation expected to change as the company grows and improves its financial health.
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