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BUZZ-Domino's Pizza: 5-star Credit Suisse analyst initiates with "neutral"

Wed, 4th Oct 2017 15:36

** Lead Credit Suisse analyst Jason West says Domino's Pizza still best-in-class, but competition is on the rise

** DPZ continues to be one of best growth stories in all of consumer; however, with restaurant delivery undergoing "dramatic" change prefers better entry point on stock, West writes in note

** Starts DPZ with "neutral" and $200 PT, inline with current level

** Says impact of delivery competitors on DPZ focuses on 3 key players: 1) McDonald's; 2) aggregators such as GrubHub , Uber,; 3) Pizza Hut

** Calculates "relatively manageable" (approx 100-200 bps) combined same-store-sales risk from these competitors in coming qtr, though believes DPZ has "limited room for error at the current valuation"

** Says DPZ could benefit from USD weakness, which would boost international results, and tax reform; cites slowing of intl unit growth, particularly in UK market, as potential downside risk

** West awarded 5 out of possible 5 stars by Thomson Reuters StarMine for his overall restaurant industry recommendations

** DPZ shares tumbled 10 pct on Jul 25 when co reported Q2 international sales miss

** Meanwhile, short sellers taking bite out of UK franchise Domino's Pizza Group

** 7 of 20 analysts rate DPZ "buy" or higher, rest "hold"; median PT $215

** DPZ off 0.7 pct to $201.29 on Weds. Stock still up 26 pct YTD

** Domino's scheduled to report Q3 results Oct 12

(c) Copyright Thomson Reuters 2017. Click For Restrictions -

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