GrubHub Stock Rallies for Second Straight Day on Bull Note

GRUB shares have more than doubled year-over-year, but there are a ton of skeptics

May 31, 2018 at 1:55 PM
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GrubHub Inc (NYSE:GRUB) stock is trading up 1.6% today at $109.25, putting it back within striking distance of its March 13 all-time high of $112.30. The move comes after Canaccord Genuity initiated coverage on GRUB with a "buy" rating and $130 price target, with the firm waxing optimistic on the company's potential as it enters the mass market. The analysts in coverage said the company's "rapidly expanding set of chain relationships and delivery network suggest it is amassing an audience of diners that is increasingly attractive to restaurant owners" and that using the GrubHub app could be a "reflex" tool for Americans, similar to hailing a ride from Uber or buying something off Amazon.

We highlighted the possibility for more bullish attention on the stock the last time we covered it back in April -- and the door remains wide open for even more bull notes going forward. Despite the fact that the shares have easily doubled in value over the past year, the majority of covering analysts remain bearish, with 14 of 23 handing out "hold" or "strong sell" ratings. What's more, GRUB is trading above its average 12-month price target of $105.29.

The equity remains heavily shorted, as well. Short sellers are holding more than one-fifth of the total float, which equates to nearly two weeks' worth of buying power, going by average daily volumes. At the same time, short interest has fallen by more than 19% already in 2018, so if this trend continues, it could result in substantial tailwinds for GrubHub stock.

Turning to the charts, the shares recently saw strong support from the round $100 level and the 20-day moving average. In fact, GRUB rallied more than 6% in yesterday's session after a number of Securities and Exchange Commission (SEC) filings showed large share purchases by members of the company's board of directors.

GRUB stock chart 2018

 

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