The Domino's Pizza Enterprises Ltd (ASX: DMP) share price is trading lower on Thursday morning after brokers responded to yesterday's annual general meeting update.
At the time of writing, the pizza chain operator's shares are down 1.5% to $85.61.
What was in Domino's update?
Yesterday Domino's released a trading update at its annual general meeting which revealed that its same store sales were up 8.4% during the first 17 weeks of FY 2021.
Management didn't provide any details in relation to where its growth was coming from exactly. However, it did note that all regions have delivered same store sales growth above its 6% medium term target.
Another positive from the update was that management revealed that Franchisee profitability is at record levels across multiple countries. It feels this underpins the health of its store network and expects it to be supportive of future demand for store growth.
Speaking of which, so far in FY 2021, Domino's has opened 74 new stores. This comprises 38 in Japan, 6 in Australia-New Zealand, and 30 in Europe.
Finally, the company has reiterated its medium term (3 to 5 years) target of same store sales growth of 3% to 6% per annum and organic new store growth of 7% to 9%.
What did brokers think of the result?
According to a note out of UBS, Domino's delivered an update in line with its expectations. However, it notes that its same store sales growth has slowed over the last 7 weeks.
In light of this and its belief that its shares are expensive, it has retained its sell rating and lifted its price target slightly to $72.00.
Elsewhere, analysts at Goldman Sachs have retained their neutral rating and $83.90 price target on the company's shares.
While it is currently tracking ahead of its expectations, it isn't enough for a change of rating just yet due to valuation reasons.
