In a note this week, Kepler Cheuvreux initiated coverage of Deliveroo (LON: ROO) with a Reduce rating and a 156p price target, warning that the current risk/reward profile is “unattractive” amid growing competitive pressure and uncertainty around takeover prospects.
Deliveroo recently confirmed it had received a non-binding takeover approach from US-based rival DoorDash, offering 180p per share in cash.
While the board indicated it would be inclined to recommend a formal offer on those terms, Kepler Cheuvreux cautioned that “the possible offer is not firm” and highlighted material downside risk should the company remain independent.
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The broker noted that Deliveroo operates a “logistics-first” delivery model with a strong focus on innovation and customer experience, but questioned the durability of its growth story in the face of increasing competition.
“Deliveroo could face an intensifying competitive landscape over time across the UK and abroad,” analysts wrote, pointing in particular to Meituan’s international expansion and Just Eat Takeaway’s takeover interest from Prosus, a major player in global food delivery.
Deliveroo has already exited Hong Kong following Meituan’s entry into the market, illustrating the pressure it may face if rivals continue expanding aggressively.
Kepler Cheuvreux warned that, “due to asymmetric downside risk in the event of a standalone scenario,” the stock’s current valuation does not justify a more bullish stance.
Deliveroo’s stock price has risen sharply in recent days on the potential M&A news, trading just above the 171p a share mark.
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