On Wednesday, UBS adjusted its outlook on Domino's Pizza (NYSE:DPZ) Enterprises Ltd. (DMP:AU) (OTC: DPZUF), lowering its price target to AUD39.00 from the previous AUD40.00. The firm has decided to maintain a Neutral rating on the stock. The adjustment follows a review of the company's investment thesis after recent Investor Days and consultations with Domino's contacts.
The Investor Days events featured presentations by Europe CEO André ten Wolde, various market CEOs, and an unexpected appearance from Chairman Jack Cowin. These engagements provided insights that prompted UBS to update its earnings per share (EPS) forecasts for the fiscal years 2024 to 2026. The revisions indicate a decrease in expected EPS of 3% for FY24E, 6% for FY25E, and 4% for FY26E. UBS noted that while Europe's outlook improved, Asia's forecast weakened, and foreign exchange rates posed a challenge.
Despite these adjustments, UBS's stance remains Neutral due to a mix of factors influencing Domino's future. The slower rates of store growth and same-store sales growth (SSSg) in key markets were cause for some caution. However, the firm also recognized that Domino's still holds considerable potential for long-term store expansion and significant SSSg.
The UBS report highlighted the balance between the slower growth in certain aspects and the enduring opportunities for expansion and sales increases at Domino's. The company, known for its global franchise of pizza delivery and carry-out restaurants, operates in multiple international markets, each with its unique growth trajectory and challenges.
Domino's Pizza Enterprises Ltd. is listed on the Australian Securities Exchange and also trades over-the-counter in the United States.
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