German food delivery company Delivery Hero SE (DE:DHER) preponed its fourth quarter and full year 2023 results to salvage last week’s massive share price loss. Delivery Hero said that it achieved the guidance set forth for Fiscal 2023 on all accounts. Plus, the food delivery company outlined a solid forecast for Fiscal 2024 to win investor support. Even so, investors were unimpressed, with DHER shares down 9% as of writing.
Details of Fiscal 2023 Results
Delivery Hero’s full-year total segment revenue rose 15.7% to €11.1 billion, with GMV (gross merchandise value), excluding hyperinflation adjustment, increasing 6.8% jump to €47.6 billion. Further, adjusted EBITDA (earnings before interest tax depreciation and amortization) came in more than €250 million. Moreover, the company met the free cash flow break-even target during the second half of the year.
For Q4 2023, Delivery Hero posted a 15.7% jump in total segment revenue to €2.98 billion and a 6.7% increase in group GMV. The company attributed the strong performance to “healthy order growth” across several geographies.
Looking ahead, Delivery Hero is confident about continued momentum in its business. For FY24, the company expects group GMV growth to be between 7% and 9%, total segment revenue growth of 15% to 17%, and adjusted EBITDA in the range of €725 to €775 million. Furthermore, Delivery Hero expects to earn positive free cash flow in FY24. The company said that it will provide further details of the results on February 14, the original date of its trading results.
Here’s Why DHER Shares Are Falling
DHER shares lost nearly 26% last week following some unfavorable news. First, DHER sold its remaining stake in British delivery company Deliveroo (GB:ROO) for a price lower than the purchase price in 2021.
Second, some reports speculated that Delivery Hero’s planned sale of some of its Foodpanda assets to Singapore’s Grab Holdings (NASDAQ:GRAB) was scrapped. Delivery Hero issued a statement denying the reports and confirmed that the talks were ongoing, but the shares already lost a lot of value by then.
Is Delivery Hero a Good Stock to Buy?
Following the unexpected announcement of results, Bernstein analyst William Woods reiterated a Buy rating on DHER shares with a price target of €60 (276.4% upside). Woods is encouraged by Delivery Hero’s upbeat forecast for Fiscal 2024. Plus, the analyst believes that shares are undervalued compared to peers and expects a solid upside.
On TipRanks, DHER stock commands a Strong Buy consensus rating based on 12 Buys and one Hold rating. The Delivery Hero share price forecast of €52.91 implies 231.9% upside potential from current levels.
