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Germany's Delivery Hero shares surge on improved forecast

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Germany's Delivery Hero shares surge on improved forecast
FILE PHOTO: The Delivery Hero headquarters is pictured in Berlin, Germany, June 2, 2017. The Berlin-based company Delivery Hero, one of Europe's largest internet start-ups. REUTERS/Fabrizio Bensch   -   Copyright  FABRIZIO BENSCH(Reuters)
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BERLIN (Reuters) – Shares in Germany’s Delivery Hero soared on Thursday after it raised its full-year revenue guidance for 2019 as customers placed more orders for its on-demand food delivery, especially in Asia.

Delivery Hero, which competes with Takeaway.com, Deliveroo, and UberEATS, lifted its 2019 guidance by 200 million euros (£177.5 million) on Wednesday to 1.3-1.4 billion euros, amounting to almost 100% year-on-year growth.

“The upgrade significantly vindicates the slings and arrows the equity has faced for daring to invest,” Jefferies said.

Delivery Hero also forecast that its European business would break even in the second half of this year.

Shares in Delivery Hero were 11.4 percent higher at 0740 GMT and stock in Takeaway and Just Eat also rose.

Delivery Hero said it had fared better in the first two months of the second quarter than expected, with new customers, orders and revenues rising.

It said it expected order and revenues to expand slightly more strongly in the second quarter than in the first and forecast that the higher growth rates would continue in the third and fourth quarters.

Berenberg analyst Sarah Simon said Delivery Hero was “substantially undervalued” compared with its peers and added that the markets in which it is active are generally more attractive than those of its competitors.

“On the flip side, the emerging-market-nature of many of these markets mean that key costs (labour and marketing) should be lower. Ultimately that should drive higher margins and profit per customer, in our view,” Simon added.

In the first quarter, revenue rose by 93 percent.

(Reporting by Michelle Martin; Editing by Alexander Smith)

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