On Thursday, Morgan Stanley (NYSE:MS) resumed coverage on Delivery Hero (DHER:GR) (OTC: DLVHF), issuing an Overweight rating and setting a price target of EUR 40.00. The new price target indicates a potential 35% upside from the current share price, driven by a higher valuation of talabat, one of Delivery Hero's key operations.
Morgan Stanley's assessment employs a sum-of-the-parts valuation approach, breaking down Delivery Hero's financials into three segments: talabat, South Korea, and the remainder of the business. The analysis provides the foundation for Morgan Stanley's bull, base, and bear case scenarios.
According to the analyst, the base case assigns zero value to the rest of the Group, excluding talabat and South Korea, due to near-term cash outflows. This approach effectively treats the rest of the business as optionality and includes a 20% conglomerate discount.
The bull case for Delivery Hero suggests a potential share price of EUR 58, while the bear case indicates a lower boundary of EUR 17. The valuation of talabat plays a significant role in the overall price target. If talabat were valued at the market's implied value rather than Morgan Stanley's fair value, the price target for Delivery Hero would align with its current share price.
Morgan Stanley also initiated coverage on talabat with an Overweight rating. This separate rating indicates confidence in talabat's individual performance and contribution to Delivery Hero's valuation.
Delivery Hero's stock rating and price target by Morgan Stanley reflect a detailed analysis of the company's individual business units and the potential for value creation within its portfolio. The Overweight rating suggests that Morgan Stanley views the company's shares as a favorable investment opportunity relative to the market or sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.