On Monday, BofA Securities announced the reinstatement of coverage on Delivery Hero (DHER:GR) (OTC: DLVHF), assigning an Underperform rating to the company’s stock along with a price target of EUR26.00. The decision comes amid concerns over several risks that could impact the company’s performance in the near-term, particularly in three key markets.
The largest EMEA food delivery company faces stiff competition from Coupang in Korea, which is one of the challenges highlighted by BofA Securities. Additionally, the entry of Chinese delivery giant Meituan into the Middle East and North Africa (MENA) market poses another significant threat to Delivery Hero’s dominance in the region.
Furthermore, changes in Spain’s employment regulations for delivery riders are expected to increase costs for Delivery Hero. The new model, which is more expensive due to its employment-based nature, could also lead to additional liabilities for the company.
BofA Securities’ price objective of EUR26.00 suggests that there is a potential downside of approximately 10% from the current stock price. The firm’s analysis indicates caution due to the identified risks, which are expected to influence Delivery Hero’s market position and financial stability in the short term.
Delivery Hero has not yet responded to the new rating and price target set by BofA Securities. The stock market’s reaction to this news will be closely watched by investors and industry analysts alike, as Delivery Hero navigates through the challenges presented in its operating markets.
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