Stifel sees upside for Delivery Hero stock, cites potential cash flow and strong margins Via Investing.com
On Wednesday, Stifel initiated coverage on Delivery Hero (DHER:GR) (OTC: DLVHF), setting a buy rating and a €60.00 target price. The company highlighted Delivery Hero's status as one of the world's leading online food delivery operators, operating in nearly 70 countries and with an estimated Gross Merchandise Value (GMV) of €45 billion in the 2023 financial year.
Stifel's analysis suggests that Delivery Hero's strategic shift to prioritizing profits could reveal value to the company's business model, yielding an adjusted EBITDA margin of 2.8% and a free cash flow yield of around 6% for fiscal year 2026 estimates.
The company expects that the portfolio restructuring could lead to cash inflows of around 2.3 billion by the end of the 2025 financial year, which would significantly strengthen the balance sheet and could increase Delivery Hero's equity value by around 8 euros per share.
According to Stifel, Delivery Hero currently trades at a discount to its global peers. The company expects this gap to narrow significantly as the company's growth improves and its financial health improves.
Delivery Hero's valuation by Stifel is based on an integrated approach, including an enterprise value based on a peer group and a target multiple of enterprise value to EBITDA, as well as a discounted cash flow analysis with a weighted average cost of capital. (WACC) of 9.9% and terminal growth rate (TGR) of 3.0%.
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