1 GrubHub Bull, 2 Neutral Analysts Review Q1 Report

Online and mobile food ordering and delivery company GrubHub Inc GRUB reported Thursday afternoon with first-quarter results that, according to one bull analyst, put the "sky is falling" thesis on the stock to bed.

The Analysts

Wedbush's Ygal Arounian maintained an Outperform rating on Grubhub with an unchanged $100 price target.

KeyBanc Capital Markets' Andy Hargreaves maintained at Sector Weight.

Morgan Stanley's Brian Nowak maintained at Equal-weight, unchanged $72 price target.

Wedbush: No Longer An 'Afterthought'

GrubHub's stock was trading as if it was poised to become an "afterthought" in the food delivery space, Arounian said in a Friday note.

The company's first-quarter report should have investors "more comfortable" with the stock and shows that competitive concerns are "overblown," the analyst said.

GrubHub remains the only third-party digital takeout partner that is operating at a profit, and the company is leveraging its strength to become a "full-suite technology partner," Arounian said. 

The Chicago-based company also stands out from its peers, as it offers restaurant owners the following, the analyst said:

• Access to its online marketplace.
• Delivery logistics.
• White label products.
• Control of diner relationships through POS integration.
• Cross-platform POS integration.

KeyBanc: Long-Term Concerns

GrubHub showed an acceleration in diner growth in the first quarter at 28 percent, while gross food sales rose 21 percent year-over-year, Hargreaves said in a Thursday note.

The report also showed continued improvements in delivery efficiency after a "rapid expansion" in the fourth quarter, the analyst said. 

Despite GrubHub's "solid internal execution," the company faces an acceleration in competition, Hargreaves said. This poses a risk to revenue growth and margin expansion, and both these metrics could start moderating in 2020 and beyond, he said. 

Morgan Stanley: 'Better Than Feared'

GrubHub's report came in toward the high end of the company's guidance, while the diner figure of 19.29 million was "particularly solid," Nowak said in a Friday note. 

The company's start to the new fiscal year was "better than feared," the analyst said. 

During the quarter, GrubHub's relationship with Taco Bell contributed an incremental "few hundred thousand" new diners to the platform, and repeat order rates were consistent with new diners coming from other channels, Nowak said.

This could be seen as evidence that the integration of Taco Bell was successful, but the key for the company moving forward is its ability to continue showing retention and order frequency among these new diners, he said. 

Price Action

GrubHub shares were down 3.76 percent at $67.23 at the time of publication Friday. 

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Photo courtesy of GrubHub.