Deliveroo Shares Are Rising – Here’s Why Analysts Are Bullish 

Deliveroo (LON: ROO) has impressed investors by increasing its revenue and growing steadily despite the challenging economic conditions. This growth has helped push its shares 13% higher over the last month. 

As a result, analysts are becoming increasingly more bullish. Here's what they are saying:

In mid-March, Deliveroo was upgraded to Buy at HSBC based on its improving profitability. The bank, which raised its price target for the stock to 150p from 130p, said it had previously underestimated Deliveroo's capacity to improve unit economics and cut costs quickly. As a result, it sees ROO's improving profitability, outshining a “lacklustre growth outlook.” 

Furthermore, the bank says Deliveroo has good value and believes its sizable net cash position can be put to better use via returns to shareholders, which should boost momentum.

Deutsche Bank analysts initiated Deliveroo with a Buy rating and a 180p price target in February. The bank said the Deliveroo Plus subscription model, the company's category expansion, and the early signs of food delivery demand recovery could contribute to the company's growth acceleration in the medium term.

Deutsche Bank cited Deliveroo's valuation, which they feel is attractive compared to peers, and the possibility that Deliveroo could be a takeover candidate as reasons that bring further upside risk.

In January, Deliveroo was upgraded to Overweight from Equal Weight at Barclays with a price target of 155p, up from 145p. Specifically, the bank said the company's growth should improve in 2024, while they believe it should see mid-term margin upside, which should boost its share price. 

Overall, four out of seven analysts covering Deliveroo have a Buy rating on the stock, while three have a Hold rating, according to data compiled by TipRanks. The average price target is 162.86p, suggesting a potential 25% upside from current levels.