Goldman Sachs downgrades Grubhub stock
Goldman Sachs downgraded its recommendation for GrubHub stock from “buy” to “neutral” Tuesday, Oct. 29, 2019, after the company released disappointing results.
- Facing stiff competition in its space, the company’s earnings dropped in the third quarter of 2019.
- Its stock, meanwhile, has lost half its value this year.
- GrubHub, meanwhile, says it going after new restaurant partnerships and investing heavily technology, which Goldman analysts do see as a good long term plan.
- However, not only did the firm change its recommendation on the stock, it also adjusted its 12 month price target to $30, a significant decrease from its previous $86.
- “We got this wrong,” wrote Goldman Sachs analyst Heath Terry to its clients.
- Grubhub also published a lengthy statement to shareholders ahead of earnings announcements that said it does not believe “that a company can generate significant profits on just the logistics component of the business.”
- Instead, GrubHub sees opportunity in partnering with local restaurants as an online advertising partner — and the food develiery services themselves are just a means to get to that point.