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Credit Suisse reiterates 'outperform' on Domino's Pizza

11/08/2017 16:51

(ShareCast News) - Analysts at Credit Suisse reiterated their 'outperform' recommendation on shares of Domino's Pizza following the company's creation of a joint-venture with its largest franchisee in the capital. The Swiss broker said it liked the long-term attractions of the business model, pointing out that while it was "unusual" it should generate a decent return on invested capital. To back up its observation, it argued that returns on store openings - which it pegged at between three or four a year for the JV from 2018 - were "attractive" and that London was underserved. However, it also said: "This marks a move back into UK store ownership and might meet some skeptical responses about a lack of franchisee willingness to invest behind growth." Credit Suisse estimated that the purchase price implied a current multiple of roughly between 10 and 11 times EBITDA. Still at 365p, the target was also unchanged.

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