Investors should look through an expected third quarter sales slowdown at online takeaway service Just Eat (JE.), according to analysts at Berenberg.
Warmer and drier weather in the third quarter of 2016 means 'a softer year-on-year UK growth rate' should be expected when Just Eat reports on 2 November, says analyst Robert Berg.
Third quarter UK order growth rates are estimated by Berg at 26%, down from 34% in the second quarter.
'However, with Domino's Pizza (DOM) and many other UK retailers reporting similar trends, we see any slowdown as unfortunate but temporary and not something that materially affects the medium term growth story,' adds Berg.
Just Eat’s share price has risen by 40% over the summer but more recently investors have been taking money off the table ahead of expectations of a weaker third quarter result.
'We are of the view that the step-down should not be extrapolated,' adds Berg.
'At this stage, ahead of company reporting, we do not believe that the slowdown will show any signs of incremental competition or lack of uptake for the platform.'
Working in Just Eat's favour in the short term is sterling weakness from the Brexit vote which should provide a sales and profit tailwind as about 30% of revenues are generated abroad.
In June, Just Eat said it was bringing big restaurant chains onto its platform after a successful trial with Gourmet Burger Kitchen.
Berg at Berenberg says the delivery service could diminish competitor appeal through exclusive deals and discounts for restaurant partners. Over the last few months, Just Eat has secured deals with Booker (BOK) and Coca-Cola (KO.:NYSE).
Analysts at Liberum forecast net profit will nearly triple from £53m this year to £141m in 2018.
Shares in Just Eat trade 6.9% higher at 542p.
