MS sees food delivery as 'show me' story, cuts Delivery Hero and Jahez

Just Eat Takeaway.com NV

29/05/2024 08:35

** Morgan Stanley says food delivery is a 'show me' story,
with the sector's history showing there is no certainty on where
long-term margins and free cash generation will settle
    ** "The model is not fundamentally 'broken' as some bears
say, but rather it's a question of reflecting the risks in
valuation"
    ** MS highlights the companies it covers have proven, in
some geographies, that they can be sustainably cash-generative
    ** However, says it would welcome further consolidation and
market exits by some companies, esp in unproven geographies
    ** MS cuts Delivery Hero  DHER.DE  to "equal-weight" from
"overweight", flagging fully priced-in near-term catalysts and
discussions on competition in South Korea and Saudi Arabia
    ** Shares in Delivery Hero fall 3.9%
    ** MS also cuts Jahez  9526.SE  to "underweight" from
"equal-weight" following EBITDA cuts and stock overhang from
Meituan's  3690.HK  potential entrance in Saudi
    ** It prefers Deliveroo  ROO.L  overall, expecting it will
become net income positive on a reported basis the soonest, as
early as 2025

 (Reporting by Linda Pasquini)
 ((linda.pasquini@thomsonreuters.com))