Cowen Remains Concern About GrubHub's (GRUB) Growth as Amazon (AMZN) Bolsters Prime Now Testing

Cowen and Company affirms GrubHub (NYSE: GRUB) with a Market Perform rating and $30 price target following news Tuesday that Amazon.com (Nasdaq: AMZN) is testing restaurant delivery in Seattle, Wash., as part of its Prime Now service.

Analyst Kevin Kopelman noted that the test is currently available to Amazon employees and the effort is focused on food & alcohol.

Kopelman also commented, We continue to be concerned about GrubHub's slowing order growth in the face of an influx of food delivery competitors. GrubHub competitors have raised $500 million YTD, excluding Uber. In addition to Prime Now restaurant delivery, Yelp (NYSE: YELP) also acquired GrubHub's largest competitor, Eat24, and Groupon (Nasdaq: GRPN) entered the space through its acquisition of OrderUp. We estimate private competitors are capturing >50% of industry growth this year, vs. 25% last year. Most importantly, GrubHub order growth has slowed dramatically, and the company is on pace to add less orders in FY15 than FY14.

For an analyst ratings summary and ratings history on GrubHub Inc. click here. For more ratings news on GrubHub Inc. click here.

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