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BUZZ-Just Eat: extends gains as another broker gets behind stock

Reuters - UK Focus

** Online takeaway ordering service Just Eat (Other OTC: JSTLF - news) builds on gains made this wk as Goldman Sachs (NYSE: GS-PB - news) reinstates the stock as "buy" & adds it to its Conviction List

** In addition to rapid growth potential as more takeaway food is ordered online, GS (KSE: 078935.KS - news) sees network effects & platform scalability driving strong profitability as established markets mature (40% EBITDA margins in the UK & Denmark in 2014)

** Also, losses should decline in other markets as Just Eat develops them using UK/Denmark as a blueprint

** Broker highlights that the business is highly cash generative, with low capital requirements & negative working capital; GS forecasts a 2014-20 CAGR of 25% in sales & 41% in EBITDA

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** On Monday, JPMorgan (LSE: JPIU.L - news) reinitiated Just Eat -- its top pick in European online space -- at "overweight"

** Stock up 2%, 3rd top FTSE 250 riser, albeit in very light volume

** Lofty P/E of c.76x (1-yr fwd) - akin to other tech valuations which sparked fears of new dotcom bubble - is a deterrent for some who say the co could be replicated given it is simply a web app acting in capacity of middleman (RM (LSE: RM.L - news) : tricia.wright1.thomsonreuters.com@reuters.net)