Shore Capital Group (LSE:SGR) upgraded Domino's Pizza Group, the UK master franchise holder for the Domino's brand, to a "buy" rating on Friday, implying 39% upside from the shares' current level.
The broker cited strong first-half results, robust profit delivery and improving cash generation behind the upgrade.
The brokerage set a price target of 270p and upgraded its rating from "hold" to "buy."
Domino's shares opened at 198.00p on Friday, up from Thursday's close of 195.00p, before rising further to 201.80p, up 3.49% on the day.
System sales rose 6.1% to £825.3 million in the first half of the 2026 financial year, while Group revenue increased 6.7% to £353.6 million.
Underlying earnings before interest, tax, depreciation and amortisation rose 3.6% to £66.2 million, with underlying pre-tax profit up 0.9% to £44.1 million.
Adjusted earnings per share increased 4.8% to 8.8p, while underlying free cash flow jumped 74.9% to £50.2 million.
Shore Capital highlighted the group's simplified "MORE" strategy, built around attracting more customers, increasing order frequency and improving efficiency.
The loyalty programme has signed up 2.2 million customers since launch, representing a 27% take-up rate among the UK customer base.
Chick 'n' Dip, launched nationally in February, now accounts for around 9% of total sales, up from about 7.5% before launch.
Net debt stood at £290.1 million at the half-year, with leverage at 2.3 times earnings, within the group's target range of 1.5 to 2.5 times.
Domino's reported earnings per share of 8p for the quarter, with a net margin of 8.4% and a negative return on equity of 69.64%.
