Boston, MA 09/23/2014 (wallstreetpr) – Analysts at Bank of America are upbeat on GrubHub Inc (NYSE:GRUB). They have a “buy” rating on the stock with a price target of $47.00. It said that GrubHub stocks have the potential to become multi-bagger stock in long-term. It will not be immediate, but gradually it will provide returns to the shareholders.
The view
Analyst Nat Schindler is optimistic on GrubHub Inc (NYSE:GRUB)’s stocks. As per Schindler, the Smartphone industry is rising, and users are making more transactions compared to what they used to do few years back. Moreover, the market offers vast penetration opportunities. As of now, only 2% online orders come from the mobile platform. GrubHub can penetrate the market and can use the low diner penetration to expand its margins. The potential market is large, and GrubHub can benefit given its dominant position in the industry.
The financial performance
Going back to second quarter results 2014, GrubHub posted a solid set of numbers. It posted revenues of $60.0 million, up 48% year-over-year. The cold winter failed to leave its mark on revenues number. The adjusted EBITDA came at $16.0 million, up 56% year-over-year. The net earnings came at $2.7 million, which was tenfold growth compared to a year ago. The customers’ base rose 51% to 4.19 million in the second quarter 2014. The average daily orders rose 34% to 174,500 per day. Total gross food sales increased by 34% to $423 million, indicating a commission rate of 14%.
The future ahead
GrubHub Inc (NYSE:GRUB) said that the revenues are expected to come in between $55.5 million to $57.5 million in the third quarter. The adjusted EBITDA is seen in a range of $13 million to$15 million. GrubHub reported $207 million in cash and equivalents at the end of 3Q2014. There is no debt outstanding in the books. It seems the financial performance and the future expectations made Bank of America to be optimistic on GrubHub Inc (NYSE:GRUB)’s stocks.
