The company’s shares went up 7.5% after being upgraded by Citi.
On Tuesday, Citi upgraded Grubhub from neutral to buy after analysts saw greater upside for the stock. Citi also raised its price target on the company from $75 to $91.
As the reason for the upgrade, Citi said that Grubhub continues to become more efficient and improve the quality of its partnerships. And in spite of increased competition, the mobile delivery market continues to grow at a rapid pace.
Things to Like About Grubhub
It’s been a good month for Grubhub and the delivery service has a number of factors working in its favor. The company’s gross food sales have seen huge gains this year, which should enable the company to deliver on its 2019 guidance.
And Grubhub is currently testing out partnerships with large restaurant chains like McDonald’s and Starbucks. These types of large partnerships are key to the company’s long-term success.
Most recently, Grubhub saw its shares rise after announcing its partnership with Dunkin Donuts. It will begin making deliveries from 400 Dunkin Donuts locations in New York City.
And of course, Grubhub got a major boost after Amazon bowed out of the food delivery industry. It’s not often that Amazon fails in its endeavors, but this month, the e-commerce giant announced it plans to end the Amazon Restaurants platform.
The company wasn’t shaping up to be a major competitor but Grubhub’s stock still rose 10% after the announcement.
What’s Next for Grubhub?
Of course, Grubhub still faces a lot of competition from Uber Eats, Postmates, and DoorDash. These four companies currently control 93% of the market share. Uber Eats is available in over 500 cities, Postmates is in 3,500 cities, and Grubhub is in 2,200.
But online and mobile delivery is a trend that’s not going anywhere anytime soon. According to recent research, two-thirds of consumers aged 18-29 have used a food delivery service over the past three months.
And half of all consumers from the ages of 30-44 have used one. Of the individuals surveyed, Grubhub was the service used most often. So Grubhub will likely continue to see its market share grow in the future.
