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The Expert View: Xaar, HSBC and Anite
by Chris Marshall on Dec 10, 2013 at 05:01
Double upgrade: Domino’s Pizza is cheap and a potential bid target
Analysts at Panmure Gordon have upgraded Domino’s Pizza (DOM.L) from sell to buy – skipping their intermediate ‘hold’ ranking – as they eye a ‘compelling entry point’ for investors.
Shares in the pizza company have fallen over the past six months as investors first reacted to the news that chief financial officer Lee Ginsberg was to retire and then last week that chief executive Lance Batchelor was off too.
But nothing has changed, argue the Panmure analysts: Domino’s ‘has always been an excellent business’, but the shares had previously been too pricey.
Now though, ‘Domino’s is trading at an 18 month low and a forward P/E of 17.8x, not seen since 2009. We change our long-standing Sell recommendation to Buy, believing that the stock’s valuation does not reflect the c20% EPS growth forecast next year,’ they said.
A private equity company could also swoop in, argued the analysts.
Domino’s shares fell 2.2% yesterday, to close at 469p.
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