Canaccord upgrades Domino´s Pizza from hold to buy

Analysts at Canaccord Genuity lifted their recommendation on Domino´s Pizza from 'hold' to 'buy' after the company reassured them at its Investor Day 'that it can continue to deliver', although the menu was changing.

The company now aims to double the number of its stores in its territories over the next decade, but will continue to return surplus cash to shareholders via a progressive dividend policy, supported by a share buy-back programme.

That follows a sharp slowdown in the rate of growth of the company´s like-for-like sales for the third quarter from 14.9% one year ago to just 3.9%.

Hence, Domino´s has shifted towards expanding its footprint and now believes it can double the number of its establishments over the next decade, to roughly 2,000, excluding Germany, with the bulk of that coming from the UK and London in particular.

Canaccord´s Nigel Parson also said the firm continued to score well on several metrics which were important to him, such as return on invested capital, balance sheet strength, cash conversion and earnings growth.

Parson stuck to his 400p target price for the stock.