Domino's Pizza Group PLC (LSE:DOM) shares fell 2% after Deutsche Bank cut its rating on the stock from “buy” to “hold” and trimmed its price target from 309p to 235p. T
Its analysts said the investment case for Domino’s had “materially changed” over the past two years.
The company once focused on handing spare cash back to investors through share buybacks, but management has shifted towards reinvesting in the business. That includes exploring a potential brand acquisition to help boost earnings growth.
The snag is that this strategy comes with greater uncertainty. “Uncertainty over timing and execution has weighed on the stock,” Deutsche said. Against that backdrop, a return to buybacks had become “an increasingly attractive alternative”.
Domino’s has tried to keep both options alive. Last month it announced a modest buyback programme alongside the launch of a chicken sub-brand. Stuber called this “somewhat of a compromise”.
The shares fell 3.2p to 200.6p.