Domino's Pizza is slated to report fiscal 2022 earnings Thursday, but analysts at Jefferies aren’t seeing enough to change their ‘underperform’ rating.
“We see short-term positives from higher growth rates, however, we remain concerned about the sustainability of likely price-led growth,” analysts said in a note published Tuesday.
Jefferies has a price target of 235p for the stock, which traded at 312.2p Tuesday afternoon with its earnings forecasts 14% below consensus estimates.
Online is a bright spot, but this might be temporary as fourth-quarter sales benefitted from the World Cup, the Just Eat integration and national advertising campaigns.
“We think that growth is likely to be price rather than volume led, as cost pressures were passed onto consumers.”
Added to lower store-rollout potential than pre-Covid, “We think that [Dominos] should trade at a discount to its historical average given the reduced roll-out scope,” Jefferies said.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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