City broker Numis reckons Just Eat PLC’s (LON:JE.) introduction of a 50p service charge for all orders won’t dampen demand on its takeaway food delivery platform.
Customers paying with debit or credit card always had a 50p surcharge levied on their order, but new EU laws mean companies can’t now do this.
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Just Eat responded by bringing in a 50p charge for all orders – a move which was met with criticism from some quarters.
The FTSE 100 firm generates around £30mln worth of cash orders a year and initial reports – which included unhappy comments from users – speculated that users may go elsewhere because of the fee.
Numis analyst Richard Stuber has poured cold water over those suggestions though, claiming that there will be “minimal demand reaction” to cash orders because of the new charge.
He reckons that the introduction of a surcharge for all orders, coupled with the addition of Hungryhouse, should add around £40mln a year to the group’s top line.
READ: Just Eat gets unconditional approval for Hungryhouse merger
“[As a result] we are raising our FY18 EBITDA by £12m at the group level (cautiously assuming increased re-investment) and EPS by 5% to 25.1p, which is 7% ahead of consensus,” wrote Stuber in a note on Monday.
The upgraded numbers have also forced Stuber to hike his target price to 948p, while he has kept his ‘add’ recommendation in place.
Shares were down 1% to 790.8p in late-morning trade on Monday.