Berenberg starts Domino's Pizza at 'buy'

The broker said Domino's continued to take share in the £3bn UK pizza market as rivals struggle with slowing like‑for‑like volumes and rising costs. It stated the group should benefit from consumers trading down and eating at home more often, helping to support volumes and offset any potential impact from appetite‑suppressant drugs.

Berenberg described Chick 'N' Dip as potentially "transformational", estimating that sales have been 80% to 90% incremental and have lifted average order values from £26 to £36. Based on an attachment rate of 5% to 18% and incremental order growth of 0% to 3% through FY26-FY29, the broker said earnings could be materially higher, with its most bullish scenario implying FY29 earnings per share 37% above current consensus.

The German bank also highlighted Domino's scalable model, underpinned by around 14m active customers, five UK supply‑chain centres, a franchise‑led delivery network averaging 24‑minute fulfilment times, and a £90m marketing budget funded by franchisees. It expects margins to expand over the medium term, supported by Chick 'N' Dip‑driven operating leverage, automation investment and tighter cost discipline under the new management team.

Berenberg noted that short interest remains elevated at around 9%, which it said reflects forecasts that fail to capture the Chick 'N' Dip opportunity.

With the shares trading on roughly 12x FY26 earnings and yielding 5%, Berenberg sees scope for a re‑rating, forecasting a three‑year EPS compound annual growth rate of 5%, rising to 13% in its bullish case and implying total shareholder returns of 10% to 18% before any valuation uplift.

Reporting by Iain Gilbert at Sharecast.com