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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.
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.