Domino’s Pizza Enterprises has implemented a 6% delivery service fee, which UBS notes will assist in offsetting the cost pressures facing the company. The broker notes the increasing cost of food and fuel, and the minimum wage increase to take effect from July, are all weighing on the company.
The broker anticipates the company’s food inflation may be in the mid-to-high single digits, but remains positive on Domino’s, finding it better positioned to manage inflationary pressures than some peers.
The Buy rating and target price of $90.00 are retained.
Sector: Consumer Services.
Target price is $90.00.Current Price is $69.87. Difference: $20.13 – (brackets indicate current price is over target). If DMP meets the UBS target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
