Virus or no virus, you still have to eat.
That’s the basic thesis behind today’s upgrade of food-delivery service
to Perform from Underperform by Oppenheimer analyst Jason Helfstein.
“We believe the impact from Covid-19 will provide a net tailwind,” Helfstein writes Monday in a brief research note. “Given more people working from home and the potential to shy away from crowded restaurants, food-delivery companies should benefit from an uptick in order frequency, assuming there are no city-wide quarantines (like those enacted in China). We could also see sustained industry-wide online delivery share gains after the impact of the virus subsides.”
Helfstein adds that he expects “industry consolidation and capital disciplines” in the food delivery sector, both of which would be bullish for GrubHub stock (ticker: GRUB). Helfstein removed his previous $40 target price on the stock, and says the valuation on the shares now appears “fair.”
GrubHub is the only public pure play—so far—on food delivery. (
(UBER) of course does food delivery, but Uber Eats is smaller than the company’s core ride-hailing business.) Postmates filed for an initial public offering last year, and DoorDash recently said it has filed a confidential S-1 to go public, but neither seems likely to complete an offering any time soon in the current volatile stock market environment.
As stocks sell off sharply Monday morning, GrubHub stock is down 6%, to $48.74.
Write to Eric J. Savitz at firstname.lastname@example.org