How are energy investors positioned?
On Tuesday, Morgan Stanley (NYSE:MS) adjusted its stance on Deliveroo Holdings PLC (LON:ROO:LN) (OTC: DROOF), downgrading the stock from Overweight to Equalweight. The firm also revised its price target for Deliveroo (OTC:DROOF) shares, raising it to GBP1.80 from the previous GBP1.40. This adjustment follows the recent news that DoorDash (NASDAQ:DASH) has made an indicative proposal to acquire Deliveroo at a price of 180p per share. According to InvestingPro data, Deliveroo currently commands a market capitalization of $3.32 billion and maintains a "GOOD" overall financial health score.
The proposal from DoorDash, confirmed by Deliveroo on April 25 after the market closed, values the company at approximately £2.7 billion. This offer represents a multiple of 12x/9x adjusted EBITDA and 20x/13x reported EBITDA based on Morgan Stanley’s forecasts for 2025/26. Additionally, it reflects a free cash flow yield of 2.0%/3.8% for the same periods. InvestingPro analysis shows the stock has delivered impressive returns, gaining over 53% year-to-date and 22% in the past week alone.
Morgan Stanley’s analyst noted that the offer price from DoorDash carries a 22% premium over Deliveroo’s closing stock price on the preceding Friday and a 32% premium compared to the closing price on the Wednesday prior, which the analyst considers a more ’undisturbed’ share price.
The analyst further stated that Deliveroo shares are expected to trade close to the indicative offer price in the foreseeable future. This expectation has influenced Morgan Stanley’s decision to adjust its rating to Equalweight, suggesting that the stock may perform in line with market averages.
Investors and market watchers are now looking at Deliveroo’s next steps, as the company considers the offer from DoorDash. Deliveroo’s stock performance in the coming days is likely to be closely tied to developments regarding the potential acquisition.
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