Investors appear to focusing on news that takeaway delivery platform Just Eat (JE.) will deliver annual sales at the top end of its £740m to £770m guided range instead of lower than forecast earnings.
Further investment to remain competitive, particularly in Latin America, is expected to push annual earnings before interest, tax, depreciation and amortisation to the lower end of a £165m to £185m range.
But shares in the company have fattened 3.5% to 629p thanks to the positive sales surprise.
Investors may also have anticipated more costs since Just Eat decided to compete with the likes of Uber Eats and Deliveroo by setting up its own delivery network.
The threat from the company's rivals has intensified recently amid reports that Uber is in talks to buy Deliveroo.
Hungry diners helped boost Just Eat's sales by 41% to £195.3m in the three months to 30 September.
Over half of orders were made via apps as people turned to more efficient ordering methods, driving overall orders 27% higher to 54.7m.
In the UK, Just Eat hit over one million orders over a weekend in September, suggesting the sales slowdown in the second quarter may genuinely have been a weather-driven one-off.
Canadian food delivery business SkipTheDishes remained a star performer, growing in the triple digits thanks to the launch of multi-language capabilities.
COMPETITIVE PRESSURES LOOM OVER OUTLOOK
AJ Bell investment director Russ Mould argues a key concern is whether Just Eat’s rivals have deeper pockets to match its ambitious investment strategy.
‘Deliveroo is the key one to watch as it is seen to have the financial capacity to achieve greater market share gains through heavy spending,’ comments Mould.
'These issues add up to a serious problem for Just Eat’s management. While their proposition is fine, there are simply too many contenders trying to feast on the market opportunity. At some point the weakest will fade away; Just Eat certainly doesn’t want to be that one.'
The third quarter results do not sway Canaccord Genuity analyst Nigel Parson, he remains at 'hold' with a 700p price target, concerned over the increasing cost to acquire customers and intense competitive pressures.
