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Investing.com - Deutsche Bank downgraded Domino’s Pizza Group (LON:DOM) from Buy to Hold and lowered its price target to GBP2.35 from GBP3.09. The stock, currently trading at $5.60, has declined about 24% over the past six months and trades near its 52-week low. According to InvestingPro data, the company maintains a P/E ratio of 10.12.
The downgrade comes as Deutsche Bank notes that the investment case for Domino’s Pizza has "materially changed over the last 2 years," shifting from a focus on returning free cash flow to shareholders through buybacks to reinvesting cash for potential brand acquisitions. Despite this strategic shift, the company has maintained its dividend payments for 26 consecutive years, with a current yield of 2.73%. InvestingPro subscribers can access additional insights about the company’s financial health and growth prospects.
Deutsche Bank indicates that this strategic pivot, while aimed at accelerating earnings growth, has created uncertainty around timing and execution that has negatively impacted the stock price.
The firm views Domino’s recent announcement of a small buyback program and the launch of a chicken sub-brand as "somewhat of a compromise" between the competing strategic priorities.
Domino’s Pizza Group trades on the London Stock Exchange under the ticker DOM and is available to U.S. investors via OTC markets as DPUKY.
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