On Thursday, Morgan Stanley maintained its Overweight rating on Deliveroo (OTC:DROOF) Holdings PLC stock (ROO:LN) (OTC: DROOF) with a steady price target of GBP1.50. The firm's analyst pointed out that Deliveroo's guidance for 2024 indicates a Gross Transaction Value growth of 5-9% year-over-year on a constant currency basis.
This forecast is slightly below the consensus and Morgan Stanley's previous expectation of 8% growth year-over-year. The analyst anticipates a mild negative response from the stock market today, acknowledging that the shares have already been under pressure leading up to the announcement.
Deliveroo's adjusted EBITDA guidance for 2024 is set between GBP110 million and GBP130 million, falling short of the consensus at GBP130 million and Morgan Stanley's estimate of GBP150 million. This could prompt minor adjustments to future earnings estimates. Despite the lower guidance, Morgan Stanley suggests that the company's conservative approach to its 2023 EBITDA forecast, which began at GBP20-50 million and concluded at GBP85 million, might indicate a similar pattern for the coming year.
The analyst's comments reflect an analysis of Deliveroo's current financial guidance and its potential implications for the stock's performance. It's important to note that Deliveroo's growth is expected to be more heavily weighted towards the second half of the year, which could be attributed to easier comparisons with the previous year.
The company's focus on the latter half of 2024 for stronger growth aligns with its previous pattern of improving financial performance as the year progresses. Investors and stakeholders will be monitoring Deliveroo's performance closely to see if the company can meet or surpass its guided figures.
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