Market Report: Just Eat plummets as competition seen heating up

Morgan Stanley left a sour taste for investors in Just Eat after suggesting that rival food delivery firm Deliveroo is gnawing into its market share.

Analyst Andrea Ferraz says that around 70% of dedicated takeaway restaurants use Just Eat, the dominant force by some margin in the sector.

However, she said rival start-ups, including Deliveroo, which delivers food for restaurants that do not already do home delivery, are growing rapidly.

“We envisage a time when Just Eat does not have most restaurants on its platform, losing the network effect which is its main barrier to entry,” she said.

The broker slashed its rating on the FTSE 250 company to underweight and its target price to 390p on a gloomier outlook, sending the shares into a tailspin, down 26.8p, or 6.4%, at 393.7p.

It was back to calmer waters for the FTSE 100, down 18.65 points at 5892.81, which for a change showed no sign of the wild swings investors have become used to — partly because of a more stable oil price and a less volatile Chinese stock market performance overnight.

Accounting software group Sage streaked ahead on the blue-chip leaderboard, climbing 30p to 597.5p on the back of a strong first-quarter performance. Organic revenues grew 6.6% thanks to good growth in Europe.

Travis Perkins, 21p up at 1812p, was among the winners as broker Panmure Gordon upgraded the builders’ merchant to Hold, arguing the share price has fallen too far in recent weeks.

Nomura used the same reasoning for lifting its recommendation on Cineworld, which surged 10.9p to 492.6p. The broker conceded that the recent trading update was disappointing despite box office smashes including the Star Wars reboot, but it argued the cinema operator tends to underperform in “blockbuster-heavy years”.

Israeli billionaire Teddy Sagi’s Market Tech rose 2.5p to 188.25p as the Camden Market landlord made the leap from AIM to the main market in the hope of attracting more institutional investors.