GrubHub's Stock Jumps After Morgan Stanley Boosts Rating, Price Target

Shares of GrubHub Inc. surged 4.5% in premarket trade Friday, after Morgan Stanley turned bullish on the online food-ordering company, citing faster diner growth as a result of accelerating restaurant additions. Analyst Brian Nowak raised his rating to overweight, after being at equal weight since May 2016. He raised his stock price target to $44, which is 18% above Thursday's closing price of $37.37, from $36. "In our view, active diner growth--a sign of GRUB's ability to bring on new users--and gross food sales per active diner--measuring GRUB's ability to grow share of stomach--remain the two most important metrics in evaluating the health of GRUB's business," Nowak wrote in a note to clients. "We see bullish indicators in both of these, which are likely to lead to higher earnings power and upward revisions." The stock has dropped 9.3% over the past three months through Thursday, while the Amplify Online Retail ETF has gained 2.7% and the S&P 500 has tacked on 6.5%.