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Lockdown trading that continues to bear fruit


In the midst of a revaluation and cyclical valuation, food delivery stocks – winners during last year’s quarantines – are showing renewed strength. While vaccine prospects support hopes for an economic recovery, rising Covid-19 cases and tighter restrictions could fuel the pandemic trade for a while. The blockchain winners basket has surged 11% since December 14, beating the Stoxx 600 and European cyclical indicators by 7 and 5 percentage points, respectively. Food delivery stocks like Just Eat Takeaway and Delivery Hero, as well as online stores THG and Zalando, rose 16-20%.
“The lockdown, introduced in mid-December in Germany, the Netherlands and the UK, will continue for at least half of the first quarter with a real risk of another lockdown in France, or at least further curfews,” says Brian Garnier analyst Clement Genelot. He believes e-commerce is a “structural winner of Covid,” with no significant reduction in online penetration following the pandemic. HelloFresh is his top pick in the first quarter. Closed trading lost momentum in late fall, when signs of vaccine progress and US election results spurred a rotation in value and cyclical stocks. With the restrictions spreading more unevenly across Europe this time around, corporate updates could shed light on which companies are doing better than others.

First of all, this is Just Eat Takeaway’s sales pitch due out tomorrow. JPMorgan analyst Markus Diebel recommends buying the stock, citing consistently strong order dynamics across the portfolio as measured by tracking bank food delivery data. Bank of America analysts, including Adrian de Saint-Hilaire, are “progressively bullish” about Just Eat Takeaway and German Peer Delivery Hero, expecting annual revenue growth of about 20% and 40% over the next three years, respectively. They write that the industry has moved beyond “peak losses” as supplies begin to rise and the market rationalizes.Lockdown trading that continues to bear fruitThe industry may also be more active in closing deals. Barclays says the $ 1.6 billion capital increase announced last week by Delivery Hero gives the company more opportunities for mergers and acquisitions.

However, interest in short has been on the rise since the start of the year and remains strong across all food delivery stocks. After a strong rally in 2020, analyst consensus also shows little to no upside, with the exception of Just Eat Takeway.

According to many analysts, the growing dependence on online services could continue after the current crisis. Goldman Sachs believes that Europe’s digital economy is at a “tipping point” and is identifying leading players. These include Adevinta, Allegro, Asos, Boohoo, Embracer, Entain, Farfetch, Flutter, Just Eat Takeaway, Ocado, Prosus, Spotify, Stillfront, and Zalando. In terms of food delivery stocks, Goldman expects double-digit growth to continue in 2021 and beyond.

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