JP Morgan has initiated coverage of Domino's Pizza Group PLC (LSE:DOM), the UK master franchise holder for the pizza delivery brand, with an underweight rating and a price target of 145p.
The target, set for December 2027, implies downside of about 25% from current levels.
Analyst Borja Olcese said the cautious stance reflected a combination of structural, operational and execution risks that were not fully reflected in the current valuation.
The bank's forecasts sit materially below consensus, leaving the risk-reward skewed to the downside in its view.
For investors seeking a comparable investment case in the sector, JP Morgan said it preferred bakery chain Greggs, which it rates overweight.
The note marks a downbeat start to coverage for Domino's, which operates and franchises pizza outlets across the UK and Ireland.
The underweight rating is the lowest of JP Morgan's three-tier scale, indicating the bank expects the shares to underperform.
A price target 25% below the current share price places JP Morgan among the more bearish voices on the stock.
The bank framed its concerns around the durability of the company's growth, pointing to challenges that it believes the market has yet to price in fully.
In afternoon trading, the shares were down 3% at 185.3p.
