Morgans initiated coverage of Youfoodz in late December 2020 with an Add rating and $1.59 target price. This note also incorporates the company’s recent quarterly update.
The company is a leading Australian provider of ready-made meals, snacks and drinks. It serves 850,000 customers (more than 300,000 active in FY21F) and has delivered more than 60 million ready-made meals since inception.
The group’s two key channels are direct-to-consumer (B2C) via its website/mobile app ordering platforms, and wholesale (B2B) where it sells product into the retail channel.
Following a strategic reset in FY21, the broker believes the group is well placed to improve profitability over coming years, driven by the commissioning of a new purpose-built manufacturing facility
Youfoodz’s quarterly update saw first half revenue in-line with Morgans’ forecast and showed the company is on track for FY21 prospectus forecasts.
B2C strength offset slightly lower B2B as the key petrol/convenience channels continue to be impacted by covid, explains the broker.
Morgans considers the company is currently trading at a material discount to listed peers Marley Spoon ((MMM)) and HelloFresh ((HFG)).
The Add rating is maintained and the target price is unchanged at $1.59.
Target price is $1.59.Current Price is $1.16. Difference: $0.43 – (brackets indicate current price is over target). If YFZ meets the Morgans target it will return approximately 27% (excluding dividends, fees and charges – negative figures indicate an expected loss).
