Barclays starts coverage of Deliveroo at 'equalweight'

The bank said it likes many parts of the Deliveroo story: grocery positioning, Plus subscription, London market share, sustainability of post-pandemic growth, incentivised founder-led team and the broader customer proposition.

"We believe there is value. So why initiate at equalweight? Clear catalysts are needed to push 'concept' stocks right now.

"All three Euro food delivery names are cheap and our ratings relative. For Deliveroo, we are slightly below consensus EBITDA in '22E and '23E.

"And, although the asset might well be strategic at some point, it isn't our base case that Deliveroo-specific M&A happens near term."

Barclays’ preferred name in the food delivery space is Just Eat, which it rates at ‘overweight’. It said the company is "definitely operationally messy but also cheap", a bit closer to breakeven and with a higher chance of a portfolio-related catalyst in 2022.