Analyst Calls Underloved GrubHub Stock a "Buy"

One analysts sees major upside for the stock

Emma Duncan
Jul 19, 2019 at 9:53 AM
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Food delivery app GrubHub Inc (NYSE:GRUB) is moving slightly higher this morning, up 0.1% at $74.97, after a fresh bull note out of Benchmark. Specifically, the brokerage firm initiated coverage with a "buy" rating and $95 price target, representing a 27% premium to last night's close. Analyst Daniel Kurnos said the stock is at "a tasty entry point," and main drivers for upside include improving margins and diner retention, as well as relatively modest fundamental expectations on the name.

After a rough start to the year, GRUB has rebounded off its recent lows near the round $60 mark. More recently, the shares have been consolidating atop their previous highs in the $74-$75 region, which roughly coincides with their 20-day moving average, and the stock is nearing its year-to-date breakeven point.

Overall, analysts remain split regarding GrubHub stock. Of the 19 covering firms, 10 sport a "strong buy" recommendation, while nine carry a "hold" or "strong sell." The stock's average 12-month price target stands at a lofty $98.04, however, representing a more than 30% premium to current levels.

Short interest has inched its way 2.4% higher over the past two reporting periods, but now accounts for more than 20% of the stock's total available float. At GRUB's average pace of trading, it would take shorts nearly seven days to buy back their bearish bets.

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