Liberum reiterates 'buy' on Just Eat, eyes potential for bid from Uber

Analysts at Liberum reiterated their 'buy' rating on shares of food delivery service Just Eat on Wednesday, stating that recent newsflow had provided "positive read across" for the outfit.

After European food delivery portal Takeaway.com's first quarter trading update revealed a 27% like-for-like order growth, displaying the significant growth potential left in the food delivery market on offer in the sector, Liberum said that with nearly 40% of the UK market still remaining as telephone orders, plenty of runway for growth remained for Just Eat.

Separately, Liberum pointed out that with Uber reportedly looking to raise a $10bn war chest, which the analysts think could be used for acquisitions in one obvious area (hint: where it has been investing in heavily), food delivery services, where it already has Uber Eats.

But while the analysts thought it likely that Uber would look to grow through acquisitions, the question remained, however, of what.

"The most likely scenario is that it looks to acquire Deliveroo, which operates in 12 countries and which is competing with Uber Eats in the UK for the #2 spot after Just Eat.

"If it acquires Deliveroo, we see little material threat to Just Eat - the combined entity is likely to be distracted by integration issues for a start but also, as we pointed out in our note from last year, the food delivery market has the characteristics of other classified portals such as autos and property (and the old Yellow Pages market) where scale creates a virtuous circle effect. We think Just Eat is essentially at the point of reaching this virtuous point."

The other option was that Uber would use the cash to buy Just Eat, Liberum said.

While there would be an obvious competition issue in the UK, where Just Eat was the market leader, if Uber Eats was indeed looking to bid for the firm, then the tastiest morsel would in fact be the group's Canadian operations - where its Skip the Dishes brand has posted triple digit revenue growth.

In addition to reiterating its 'buy' rating, Liberum also stood by its 1,320p target price for Just Eat.