Australia's Domino's Pizza drops as brokerages flag challenges ahead

Dominos Pizza Enterprises

16/04/2024 01:58

(Updates)
    ** Shares of Australia's Domino's Pizza Enterprises  DMP.AX 
fall as much as 3.4% to A$37.28 to hit lowest since Aug. 2019
    ** Analysts at Morningstar say the full potential of the
fast-food retailer's Japanese and French operations is unlikely
to be unlocked in near term, says brokerage Morningstar
    ** Brokerage sees higher marketing costs in Japan to weigh
on near-term profit margins but expects store growth to recover
locally
    ** "We believe these challenges and weaker trading
conditions in some other markets are weighing on investor
sentiment" - Morningstar
    ** Trims FY25 EPS est. on DMP by 11% to A$1.88
    ** But brokerage says company's growth potential is
unaffected and keeps long-term earnings outlook unchanged;
retains A$61 fair value estimate
    ** Another brokerage UBS cuts PT on DMP to A$40 from A$42
        ** UBS says Japanese stores need to mature before store
growth accelerates 
  
    ** Morningstar expects company's network to grow to 6,200
stores by FY33, vs management's long-term target of 7,100
    ** Stock down 34.5% this year as of last close

 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))