Analysts at the Swiss bank have moved the stock up to ‘neutral’ from ‘sell’ given the pullback in its share price, although they stopped short of tipping it outright given concerns over pricing and franchisee discontent.
“Domino's Pizza had a challenging 2018, with concerns around franchisee profitability and the impact on the store roll-out, in particular, coming to the fore,” read a note to clients.
“With the shares down -35% in 2018 we believe that the risk-reward is now more balanced, with little now priced in for further store roll-out, and the latest UBS Evidence Lab App and Spend Tracker data showing some supportive trends including improved customer retention and frequent customers.”
Domino’s has been under growing pressure from the likes of Deliveroo and Uber Eats in recent years. But UBS’s data suggests its market share has now stabilised, as has its app ranking – an important metric for these food delivery firms.
Domino’s shares rose 3% to 258.1p on Thursday morning, just above UBS’s price target of 245p.