Domino's Pizza Group PLC (LSE:DOM), the master franchise in the UK, is expected to see its share price benefit from a return to volume-driven delivery growth in the next two to three years, analysts believe.
RBC initiated its coverage of the fast food chain with an “outperform” rating and placed a 400p share price target, representing a 25% premium to its market value on Tuesday.
Analysts are confident in the group’s goal of growing sales through increasing volumes as well as its plans to expand internationally and grow a second brand.
“In the core business, management's experience of driving growth in markets perceived as mature, whilst leveraging data to fuel personalisation and loyalty, will re-energise dormant customers, driving both order counts and basket sizes,” the Canadian bank said.
It argued that the market’s valuation for Domino’s “does not reflect the opportunity in the core business” and believes there is a 24% discount compared to its discounted cash flow valuation.