Domino's Pizza Enterprises Ltd (ASX: DMP) shares were on fire on Thursday.
The pizza chain operator's shares rocketed higher after the market responded positively to its FY 2023 results.
And while the results themselves were disappointing (as expected), investors were pleased to see a return to sales growth early in FY 2024.
But is it too late to invest? Or can Domino's shares keep rising from here? Let's find out.
Are Domino's shares a buy?
According to a note out of Morgans, its analysts believe that investors should be snapping up the company's shares while they can.
This morning, the broker has retained its add rating and $60 price target on the company's shares.
So, with Domino's shares currently fetching $52.54, this implies a potential upside of 14% for investors over the next 12 months.
Morgans feels that the company is now over the worst of its issues following a tough period caused by management's poor response to inflationary pressures. The broker commented:
We get the sense the worst has passed for DMP. Order counts are starting to move up following the removal of delivery service fee and reset of the menu to appeal to the value-focused customer.
It also highlights that there will be no need to raise capital. It adds:
Having brushed uncomfortably close to its banking covenant, DMP has stated that debt is now on the way down and it is 'confident' there will be no breach (and no capital raise) in FY24. There are green shoots of recovery.
All in all, following its positive start to the new financial year, the broker believes the company can hit its same-store sales growth target. It concludes:
Growth swung positive in ANZ and Europe in early FY24, driven by better volumes. It will take longer in Asia, but we think DMP will achieve its 3-6% same store sales target in FY24. Our NPAT forecast is unchanged for FY24 and rises by 4% in FY25. We retain an ADD rating and $60.00 target price.
