Credit Suisse retains appetite for Domino's Pizza, boosts target price

Credit Suisse reaffirmed its 'outperform' recommendation on Domino's Pizza and boosted its target price for the shares, while pointing to scope for further upside to the company's earnings per share.

The Swiss broker highlighted the company's decision to re-introduce stock buybacks and accelerate the pace of store openings in fiscal year 2016, from 50 to 65, as well as what it described as the company's "healthy current trading".

Analysts Tim Ramskill, Ed Birkin and Julia Pennington lifted their share price target from 1,100p to 1,210p.

They also pointed to scope for further earnings per share upside stemming from Euro 2016 and the chain's loyalty plans.

Furthermore, their estimates did not yet take into account those share buybacks.

The analysts stuck to their call for 8% growth in UK like-for-like sales in 2016 (consensus: 3%) despite the 10.5% rate of increase witnessed in the first nine weeks of 2016.

Credit Suisse noted their fiscal year 2016 and 2017 EPS estimates were already running respectively 8% and 14% above the analyst consensus as compiled by Bloomberg.

Ramskill and his team also lowered their estimate for Domino's weighted average cost of capital - the interest rate used to assign a present value to the company's stream of cash flows - from 9.2% to 8.7%.