Is Delivery Hero (ETR:DHER) a Mispriced Opportunity on the Brink of Profitability?

The question of whether Delivery Hero SE (ETR:DHER) represents a mispriced opportunity hinges on its path to profitability and the alignment of analyst forecasts with discounted cash flow (DCF) valuations. With a market capitalization that has fluctuated amid mixed earnings reports and evolving macroeconomic conditions, the company's valuation merits a granular analysis of its financial trajectory.

Analyst Forecasts: Optimism Amidst Earnings Volatility

Analysts have maintained a revenue forecast of €14.2 billion for 2025, reflecting a 5.9% year-over-year increase, despite recent earnings reports that revealed widening losses. This stability in revenue expectations contrasts with a downward revision in price targets, which now average €34.10 per share, down from previous levels. The disparity between revenue optimism and profit pessimism underscores a critical valuation tension: while Delivery Hero's top-line growth remains robust, its ability to translate this into profitability remains unproven.

The EPS growth forecast, however, offers a glimmer of hope. A consensus of 77.8% average annual growth over the next five years suggests that analysts anticipate a sharp turnaround in earnings per share. This optimism is partly fueled by the company's strategic focus on AI-driven efficiency and its Global Tech Platform, which have already driven a 40-basis-point improvement in gross profit margins in Q3 2025. Yet, the wide range of price targets-from €21.00 to €52.00-highlights significant uncertainty about the company's ability to achieve sustainable profitability.

DCF Valuation: A Path to Intrinsic Value

To assess whether Delivery Hero is mispriced, a DCF model requires three key inputs: free cash flow (FCF) projections, the weighted average cost of capital (WACC), and a long-term growth rate.

Free Cash Flow and Operating Margins
Delivery Hero's FCF has shown marked improvement, with H1 2025 reporting a €96 million year-over-year increase, reducing the net outflow to -€8 million. The company has reaffirmed its full-year 2025 guidance, projecting FCF exceeding €120 million-a revision from an initial target of €200 million due to foreign exchange headwinds. For 2026, adjusted EBITDA margins are expected to rise to 6.0%-6.5%, up from 3.3%-3.5% in 2025, signaling improving operating leverage. These trends suggest a transition from growth-at-all-costs to disciplined profitability, a critical shift for DCF modeling.

WACC and Discount Rate
The company's WACC, a critical discount rate in DCF analysis, is estimated at 10.8% as of December 23, 2025. This figure incorporates a cost of equity of 12.1%, derived using the Capital Asset Pricing Model with a risk-free rate of 3.05%, an equity risk premium of 5.60%, and an adjusted beta of 1.46. A WACC of 10.8% reflects the market's perception of Delivery Hero's risk profile, which remains elevated due to its unprofitable history and exposure to volatile markets.

Long-Term Growth Assumptions
For the terminal growth rate, a conservative assumption of 1.6%-slightly above the long-term inflation rate-is reasonable. This aligns with industry projections of 8.0% annualized revenue growth by 2025, which, while lower than historical rates, indicates a normalization of growth. Morningstar's projection of a 1.3% operating margin by 2029 further supports the idea that Delivery Hero's margins will stabilize at a modest but sustainable level.

Valuation Implications

Applying these inputs to a two-stage DCF model, Delivery Hero's intrinsic value appears to be significantly lower than its current share price. For instance, a WACC of 10.8% and a terminal growth rate of 1.6% would discount future cash flows to a valuation that may not justify the €34.10 consensus price target. This discrepancy suggests that while analysts remain cautiously optimistic about revenue growth, the market may be overestimating the company's ability to convert this into shareholder value.

However, the DCF model is not without its limitations. The company's exposure to foreign exchange volatility and macroeconomic headwinds introduces uncertainty into FCF projections. Additionally, the assumption of a 1.6% terminal growth rate may be too conservative if Delivery Hero's AI-driven efficiency gains accelerate beyond current expectations.

Conclusion: A Tenuous Balance Between Growth and Profitability

Delivery Hero stands at a crossroads. Analysts' revenue forecasts and EPS growth projections reflect confidence in its long-term potential, but the company's path to profitability remains unproven. A DCF valuation, while suggesting undervaluation relative to current price targets, hinges on assumptions that may not fully capture the risks of its operating environment.

For investors, the key question is whether Delivery Hero can sustain its margin improvements and FCF growth while navigating macroeconomic challenges. If the company succeeds in achieving its 2026 EBIT profitability target, it could validate the more bullish price targets. However, until then, the stock appears to be a high-risk, high-reward proposition-mispriced not by its fundamentals, but by the market's appetite for speculative growth.