Working the "Trump trade," Credit Suisse has named its favorite, launching coverage of GrubHub (GRUB +1.4%) at Outperform.
"We like the underpenetrated market opportunity, potential for 4Q acceleration on an easy Y/Y comp, high incremental margins, increasing take rates and EPS upside option value should Trump successfully implement a corporate tax cut," writes analyst Paul Bieber.
Among investment highlights, he mentions a very large and fragmented market with low online penetration; an attractive marketplace model with high incremental margins; some modest margin expansion to come this year; and investments in delivery that expand the overall market opportunity.
He has a price target of $48, implying 29% upside.
That's because basking in nice weather isn't great for ordering food in. Shares didn't quite tread water (down 2.8%) during a November with little rain in its key cities.
The company's traffic slowed down that month (unique visitors up 11% vs. October's +20%), writes Wedbush's Aaron Turner, which he thinks is "attributable to unfavorable weather in key geographies above all other potential factors as Grubhub’s competitors also experienced similar deceleration."
A recent temperature plunge creates "favorable ordering conditions," he argues.
GrubHub (GRUB +0.8%) has rolled out new features to sharpen its platform for diners nationwide.
New to its app are preordering (allowing for orders up to 120 hours ahead of schedule); map-based search, allowing for filtered searches by location; and express reorder, allowing for people to quickly re-up past orders using just two clicks.
Most changes are available on GrubHub and Seamless platforms; the company's still developing express reorder for its iOS app.
Shares rose today but have fallen 6.7% in a week after commentary from the company's CEO rejecting the "nationalist, anti-immigrant and hateful politics of Donald Trump."
Amazon (AMZN +2.6%) announced today that it launched its one-hour restaurant delivery service in Irvine, California. More than 50 restaurants are included in the program, with most appearing to be independent operators.
Amazon Restaurants is now active in six California cities. The program is for Prime members only and includes no mark-ups from the pricing listed on the restaurants' menus.
A broader roll-out of Amazon Restaurants could eventually threaten InstaCart, GrubHub (NYSE:GRUB), HelloFresh and Blue Apron - as well as nip at after work takeout traffic at Whole Foods Market (NASDAQ:WFM). It could also be a concern for operators such as DineEquity (NYSE:DIN), Darden Restaurants (NYSE:DRI) and Brinker International (NYSE:EAT) as it gives independent restaurants a formidable partner.
GrubHub (NYSE:GRUB) is off 5.8% in a move attributed to sharp comments about the presidential election from CEO/founder Matt Maloney, where he asked people with "hateful attitudes" to resign.
Shares are down 9.4% over the past two days. An e-mail sent by Maloney (and confirmed by the company) said that he "absolutely" rejected the "nationalist, anti-immigrant and hateful politics of Donald Trump."
He addressed his note to anyone who felt scared or exposed by the result and said GrubHub would "fight for your dignity and your right to make a better life for yourself and your family here in the United States ... If you do not agree with this statement then please reply to this email with your resignation because you have no place here. We do not tolerate hateful attitudes on our team."
In a blog post, Maloney has responded to commentary that said his mail meant Trump voters needed to get out of the company. "I want to clarify that I did not ask for anyone to resign if they voted for Trump. I would never make such a demand. To the contrary, the message of the email is that we do not tolerate discriminatory activity or hateful commentary in the workplace, and that we will stand up for our employees."
Barron's has introduced a tracking index of stocks favored by younger consumers.
Though the combined performance on the group of 50 stocks smashed the returns of the S&P 500 over the last five years, this year it lags slightly so far.
As expected, the price-earnings ratio of the Barron's Next 50 Index skews higher due to the focus on longer-term millennial growth.
Some of the companies making the initial list are Amazon (NASDAQ:AMZN), Barnes & Noble Education (NYSE:BNED), Boston Beer (NYSE:SAM), Chipotle (NYSE:CMG), Etsy (NASDAQ:ETSY), GameStop (NYSE:GME), GoPro (NASDAQ:GPRO), GrubHub (NYSE:GRUB), Kate Spade (NYSE:KATE), Live Nation (NASDAQ:LIVE), Lululemon (NASDAQ:LULU), MasterCard (NYSE:MA), Match Group (NASDAQ:MTCH), Monster Beverage (NASDAQ:MNST), Shake Shack (NYSE:SHAK), Square (NYSE:SQ), and Yelp (NYSE:YELP).
A millennial-focused ETF launched last spring, the Global X Millennial Thematic ETF (NASDAQ:MILN), has outperformed the S&P 500 Index over its brief history.
In addition to enhancing social recommendation and event discovery features.
Food ordering – available on restaurant pages integrated with Delivery.com or Slice
Appointment request – book via a business page, confirmation communicated through Messenger
Event ticketing – purchase of movie tickets powered by Fandango enabled directly on Pages; Ticketmaster and Eventbrite collaborations for other events further noted
Quotes – request quotes from local businesses on participating business pages
Facebook's (FB +1.1%) on a mission to simplify tasks that are often facilitated through multiple products with singular features (i.e. recommendations, food ordering, ticketing, local business quotes etc.) by streamlining them across its own integrated network of platforms.
E-commerce sales during the holiday season are forecast to increase 17.2% this year to $94.71B, which represents a record 10.2% of all retail sales for the period.
The +17% growth also represents the fastest pace for holiday e-commerce sales since 2011.
Impressively, Amazon is expected to grow its holiday e-commerce market share above the 25% it took down last year.
Outside of Amazon, investors can bet on online retail broadly through the Amplify Online Retail ETF (NASDAQ:IBUY). IBUY aims to match the price and yield performance of the EQM Online Retail Index.
The IBUY is up 8% since launching in April, compared to a 5% drop for the S&P Retail ETF (NYSEARCA:XRT).
The top ten holdings of the Amplify Online Retail ETF are Etsy (NASDAQ:ETSY), Grubhub (NYSE:GRUB), Blue Nile (NASDAQ:NILE), eBAY (NASDAQ:EBAY), RetailMeNot (NASDAQ:SALE), Copart (NASDAQ:CPRT), 1-800-Flowers.com (NASDAQ:FLWS), Amazon (NASDAQ:AMZN), Stamps.com (NASDAQ:STMP), and NutriSystem (NASDAQ:NTRI).
This year's e-commerce boom will also be a net positive for shippers FedEx (NYSE:FDX) and UPS (NYSE:UPS), despite the increasing logistical challenges amid a higher mix of large packages. There's also Wal-Mart (NYSE:WMT) to consider after the company made a dramatic commitment to invest more in e-commerce during an investor meeting a few weeks ago.
GrubHub (NYSE:GRUB) has slipped 2.8% today after Stifel Nicolaus downgraded shares to Hold, from Buy, based on valuation.
The stock is up 71.4% YTD. Shares had hit a 52-week high of $44.58 last Thursday.
Analyst John Egbert maintained Stifel's price target of $45.
"We have supported the company’s investment story since its lows and continue to believe in GrubHub’s ability to execute in both its marketplace and delivery businesses; as such, although we are Hold rated, we would reevaluate our rating should there be material weakness in the shares," he writes.
GrubHub (GRUB -1.2%) is back on a positive trajectory and set to gain share with improvements in its food delivery platform, says Cowen in bumping the stock's price target.
The firm raised its target to $38 from $33 -- still lower than today's lowered price of $41.
GrubHub faces hot competition in the area from the likes of Amazon (via PrimeNow), Uber and Yelp, but Cowen notes GrubHub's the biggest third-party player.
The firm says core GrubHub brands will boost net food sales to $6.8B in 2025, from $2.4B this year.
"GrubHub has attributed the vast majority of the acceleration to specific improvements made following the company's recent technology platform rollout," Cowen said. "Examples of improvements include restaurant recommendations and sorting, menu item recommendations, and checkout flow."