In a report released yesterday, Monique Pollard from Citi downgraded Delivery Hero SE (DHER – Research Report) to a Sell, with a price target of €26.00.
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Monique Pollard’s rating is based on several factors influencing Delivery Hero SE’s competitive position and financial outlook. The company’s valuation does not seem to fully reflect the challenges posed by increasing competition in the Middle East and North Africa (MENA) region, particularly from Meituan-backed Keeta. Keeta’s aggressive market entry strategies, including promotions and discounts, have made it a formidable competitor in Saudi Arabia, capturing significant market share quickly. This competitive pressure is anticipated to affect Delivery Hero’s margins and potentially lead to decreased market share, despite a generally favorable market environment.
Additionally, the financial implications of defending its market position in Saudi Arabia are expected to impact Delivery Hero’s profitability. Meituan’s substantial investments in market share gains in Saudi Arabia, which are expected to result in significant losses, indicate an intense competitive landscape. Consequently, Delivery Hero’s EBITDA projections are expected to slightly decline in 2025 and see only modest growth in 2026. These factors have led to a reduction in the target price for Delivery Hero’s stock, underlining the challenges in maintaining its margins in a market with aggressive new entrants.