Domino's share price tipped to rise 40% amid 'absolutely undiminished' growth opportunity

Domino's shares have been tipped to shoot higher…

| More on:
asx pizza share price represented by hand taking slice of pizza

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Domino's Pizza Enterprises Ltd (ASX: DMP) share price was caught up in the selloff on Tuesday.

The pizza chain operator's shares dropped 2% to $64.89.

This means the Domino's share price is now down 47% since the start of the year.

Will the Domino's share price soon deliver?

While the Domino's share price hasn't been delivering for investors in 2022, the team at Morgans think investors should stick with it.

According to a note, the broker has retained its add rating but trimmed its price target to $93.00.

Based on the current Domino's share price, this implies potential upside of 43% for investors over the next 12 months.

'Absolutely undiminished' growth opportunity

While Morgans acknowledges that foot inflation and foreign exchange headwinds will weigh on its earnings in the near term, the broker feels that investors should look beyond this.

Instead, the broker thinks investors should be looking at the company's significant long term growth opportunity which is being underpinned by its store expansion plans. These plans will see the company aim to more than double its network in current markets between now and 2033.

Its analysts commented:

The near-term challenges of currency headwinds and inflation continue to intensify. We have lowered our EBITDA estimates by 2% in FY22F and 6% in FY23F to take account of these pressures (we now sit below consensus). This should not, in our view, take away from the significant longer-term opportunity for growth that DMP offers.

The engine of DMP's growth is the rollout of new stores. Although near-term store rollout may be slower than DMP would like, the medium-term opportunity is absolutely undiminished, as evidenced by the reiteration of the 2033 outlook today. DMP has developed a solid platform for inorganic expansion.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Broker looking at the share price.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Broker Notes

Guess which ASX 200 share offers 12% upside and a 4% dividend yield

Bell Potter just slapped a buy rating on this stock.

Read more »

A man leaps from a stack of gold coins to the next, each one higher than the last.
Broker Notes

Qantas or Telstra share price: Which will climb higher in 2024?

Let's see what top broker Goldman Sachs has to say about these ASX blue-chip stocks.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Woman using laptop for job search
Investing Strategies

2 ASX 200 shares to buy for 'strong growth' at decent prices right now

Searching for a bargain? Here's a pair that Catapult's Dylan Evans has his eyes on at the moment.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Uranium is set to boom, and this is the 'premium' ASX stock to buy

Shaw and Partners' Jed Richards reckons these are the shares to buy for the nuclear energy theme.

Read more »

female in hard hat crosses fingers
Investing Strategies

The ASX 200 stock that could get second time lucky

These shares have failed to impress in 2024, but many experts believe it's a bargain buy.

Read more »