Deutsche Bank says 'sell' Just Eat over investment, competition

"We think Just Eat's investment plan makes strategic sense, but with substantial implementation risks, additional costs and an uncertain return. Management hasn't committed to a particular level of spend beyond 2018 but we think investment will continue at a rapid rate," the bank said as it cut Just Eat's target price to 630p from 830p.

DB cut its forecast numbers on Just Eat by 20-30% for 2018-2020 as it lowered its long-term EBITDA margin assumption for the group from 50% to 33%, while still an improvement from 25% in 2018E, it was revised to a more moderate figure as "delivery is fundamentally a lower-margin/lower-return business".

"When GrubHub expanded into delivery, they had an early mover advantage in the US as UberEats had only just launched. More recent example from Takeaway.com shows that it's hard to make delivery profitable," Deutsche's analysts said.

"In delivery, Just Eat doesn't have the first mover advantage," the analysts concluded.

As of 1040 GMT, shares had lost 4.62% to 752.00p.