Liberum reiterates 'sell' rating on Dominos Pizza
Analysts at Liberum don't see much changing in the immediate future for Domino's Pizza, expecting its weak performance of late to carry on throughout the third quarter despite easier comparatives.
The broker said inertia exists with regards to Domino's row with franchisees, which has worsened to such an extent that franchisees were now refusing to do national campaigns which may be to their own detriment - indicating the scale of the challenge ahead.
"If however, trading has not been impacted by this boycott, raises the question why the Plc should run the NAF and do group marketing," said Liberum, which reiterated its 'sell' rating on Domino's.
"Short term we are concerned about elevated debt levels. While a disposal of International would remove P&L losses, stem cash outflow and deliver +7% EPS this would not provide any impetus for us to change our investment case stance."
Liberum noted that a new chief executive and chairman would be received well, but their effect may be "limited by time", the potential scale of a reset and their ability to get the franchisees to the negotiating table.
"Time is not a friend of the shares," concluded Liberum, which also stood by its 180p target price.