The poor summer weather saw Brits seeking solace in takeaway meals, boosting like-for-like sales at takeaway ordering system Just Eat (JE.) by 48% in the three months to 30 September.
The strong order growth has resulted in the £3 billion cap increasing its full-year revenue guidance from £230 million to £240 million, but this isn’t enough to convince investors with the shares down 6.2% to 413.5p this morning.
Investors are perhaps concerned by the group’s decision to continue to reinvest and therefore maintain its current full-year EBITDA (earnings before interest, tax, depreciation and amortisation) forecast despite the 4% increase in revenue guidance.
Goldman Sachs analyst Carl Hazeley says recycling cash into the customer proposition should further accelerate growth and ultimately result in higher profitability in the long-term.
‘Based on current guidance Just Eat will deliver c.200 basis points of margin expansion in FY2015, illustrating high and rising profitability while continuing to invest. As we have previously noted, marketing spend remains highly flexible and discretionary, leaving scope for the company to deliver FY2015 EBITDA ahead of current guidance/expectations,’ Hazeley adds.
Just Eat’s investment in technology meant 74% of UK orders were made via mobile devices in the third quarter, up from 69% in the first half, and of these 41% were by app.
Canaccord Genuity has reaffirmed its ‘buy’ rating with a target price of 570p, implying 37.8% upside.