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NEW YORK (TheStreet) -- Firms including Citigroup and Canaccord Genuity initiate coverage of GrubHub with buy ratings and $40 price targets, while William Blair and BMO Capital Markets initiate coverage with Outperform ratings.


Shares of GrubHub (GRUB) - Get Report were slipping on Thursday as the online restaurant takeout service received its first analyst initiations.

Firms including Citigroup and Canaccord Genuity initiated coverage of GrubHub with buy ratings and $40 price targets. William Blair and BMO Capital Markets both initiated coverage with Outperform ratings, with BMO issuing a $40 price target as well.  Morgan Stanley initiated coverage with an equal weight rating.

BMO Capital Markets analyst Edward Williams said in an initiation note, "We are modeling top-line growth of 29% in 2014 to $220 million and a further 27% in 2014, as we anticipate the company will grow active diners and daily average orders." Williams noted GrubHub's attractive business model, the increase in mobile interactions, its presence as a leader among takeout platforms and its opportunity to drive strong revenue growth in the large takeout and delivery market.

While Citigroup analyst Mark May rated GrubHub a buy, he cited some key investment risks. Citi noted that GrubHub derives its revenue from less than 10 cities and needs to expand, it faces competition -- albeit from mostly smaller rivals -- and has a high valuation on near-term revenue and earnings. Still, May issued a $40 price target on the stock, which was trading at $30.50 at the time.

At last check, shares of GrubHub were slipping almost 2% to $32.

In New York, I'm Brittany Umar for TheStreet.

Written by Brittany Umar in New York.