Goldman Sachs says Just Eat delivery investment is right decision

Since the decision was announced, with the company's full-year results last month, the stock has dropped 16%, while compared to its February peak, it's now down around 20%. But GS said the move to invest in its own delivery service makes sense given the well-funded expansion of delivery-led operators.

"As long as Just Eat focuses on restaurants that are a natural extension of its marketplace offer (customer demographic, average order value), we believe UK delivery is unlikely to move beyond 5% of orders, with the highly profitable marketplace ensuring EBITDA margins remain above 50%.

"Despite downgrades to estimates post recent management guidance, we continue to see Just Eat growing top line and EBITDA at a more than 20% compound annual growth over the next three years, leaving valuation favourable versus European peers."

In fact, Goldman argued that the value of UK business and iFood mean Just Eat's 10 other countries are now free at the current price.

GS added that amidst the debate about delivery, it it’s important to remember that Just Eat is a marketplace company first and foremost and is likely to be for the forecastable future. "That marketplace is very successful, adding circa £70mn EBITDA in 2017 and growing 61% at the group level".

At 1530 GMT, Just Eat shares were up 1.1% to 714.20p.