Broker says Domino’s share price now has 45% upside after recent weakness

Is it time to grab a slice of Domino’s?

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The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price has been having a tough time in 2022.

On Monday, the pizza chain operator’s shares ended the day at $69.21. This is almost 60% lower than their 52-week high of $167.15.

Where next for the Domino’s share price?

The good news for shareholders is that one leading broker is tipping the Domino’s share price to rebound.

According to a recent note out of Citi, its analysts have put a buy rating and $100.95 price target on the company’s shares.

Based on the current Domino’s share price, this implies potential upside of approximately 45% for investors.

What did the broker say?

Citi acknowledges that Domino’s is facing a very difficult period. This is being driven by lower traffic, inflationary pressures, and labour shortages.

Nevertheless, it appears to feel that this is already understood by the market and priced in following recent share price weakness.

In light of this, the broker believes that now could be a buying opportunity for investors. Particularly given that its long term growth remains very positive.

Our analysis of high frequency data suggests Domino’s website traffic in key markets (Europe and Japan) is under increasing pressure. These headwinds are likely further exacerbated by inflationary pressures and labour shortages.

However, we reiterate our Buy rating as we see upside from potential M&A activity and expect sales momentum to rebound later in CY22 once the business has cycled through the abnormal comps. While downside risk remains to the company’s short- to medium-term rollout, the long-term rollout opportunity does not appear to have changed.

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.

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