Deliveroo shares gained around 0.3% Wednesday after Morgan Stanley upgraded the stock to Overweight from Equal Weight in a note to clients…

However, the 0.3% rise does not tell the full story of the session, with ROO shares initially hitting a high of 115.6p before retracing to close at 108.8p.

Analysts at the investment bank also raised their price target on Deliveroo to 135p from 115p, telling investors that Deliveroo is near free cash flow breakeven.

In addition, they noted that the UK economy is resilient, the grocery sector is “scaling nicely,” and top-line estimates have been “right-sized.” Morgan Stanley raised its EBITDA forecasts for Deliveroo to between  3% and 5% for 2023 to 2026.

Our View: We have been neutral on Deliveroo for a while…

While its share price was stuck at lows, the lack of positive demand data kept us on the sidelines. While some analysts are becoming more bullish on the stock (Bernstein upgraded Deliveroo in March), Google searches continue to slide while Twitter mentions remain subdued. As a result, our view stays the same.