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Is Amazon hungry for Grubhub? Analyst thinks food delivery leader could be next

An analyst thinks Grubhub, headquartered in Chicago’s Loop, could be the next acquisition target for Amazon. (Keri Wiginton / Blue Sky)

With Amazon is on its way to acquiring Whole Foods, one analyst thinks Grubhub could be its next target.

Grubhub (NYSE: GRUB) shares shot up more than 4 percent Monday morning on the suggestion that it could be the next piece of Amazon’s food domination plans.

Aaron Turner, a Los Angeles-based analyst who covers Grubhub for Wedbush Securities, wrote in a note to clients Monday that the tech giant’s plans to buy Whole Foods for nearly $14 billion set it up for a larger food ordering and delivery play.

Turner pointed out in the note that Amazon (NASDAQ: AMZN) has already tried restaurant delivery — with “minimal success” — and that Grubhub and Whole Foods likely share a similar user base in terms of geography and demographics. Plus, he wrote, Grubhub’s delivery infrastructure could be applied to groceries.

“A combination of WFM and GRUB would give AMZN significant competitive positioning on in-home meal consumption regardless of whether the meal was prepared in home or at a restaurant,” Turner wrote in the note, titled “WFM the Main Course, GRUB for Dessert?”

Owners of the Amazon Echo smart home device can already use the Alexa voice assistant to order food through Grubhub. In his note, Turner also suggested more far-fetched integrations are possible, such as Dash reordering buttons for users’ favorite restaurants.

He reiterated an outperform rating on Grubhub stock, with a price target of $50. Turner wrote that an acquisition price of $55 per share is possible, for an enterprise value of about $4.5 billion. Grubhub shares traded at about $45.14 midday on Monday, up more than 4 percent compared to the previous close. Its current market capitalization is about $3.9 billion.

A Grubhub spokeswoman declined to comment on the note.

“Grubhub is the nation’s leading online and mobile food-ordering company, and we’re focused on innovating to make it easy for millions of diners to order from the broadest, best set of restaurants,” she wrote in an email. “We do not comment on any speculation around mergers or acquisitions.”

An Amazon representative also declined to comment. Amazon shares traded nearly flat at about $996.87.

aelahi@chicagotribune.com
Twitter @aminamania

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