Is it a problem for shareholders that Italians don't like Domino's Pizza?

The pizza chain appears to have fizzled out in Italy.

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A man looks sadly away from his computer screen as he holds a slice of pizza in his hand with an open pizza box in front of him on his desk.

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Key points

  • Domino's has reportedly left the Italian market on the back of increasing competition among local pizzerias
  • The company entered the birthplace of pizza back in 2015 through a franchising agreement
  • Still, the company is expecting to open upwards of 500 stores in financial year 2022 – just one of the reasons Citi tips it as a buy

S&P/ASX 200 Index (ASX: XJO) share and dinnertime favourite Domino's Pizza Enterprises Ltd (ASX: DMP) has reportedly suffered a major upheaval in the birthplace of pizza, resulting in its exit from the nation.

Domino's operated 29 stores over the seven years it existed in Italy. The final Italian shop front has now been locked for good, Bloomberg reports.

Though, shareholders can rest easy. The company still boasts operations in more than 90 nations while brokers remain bullish on the Domino's share price.

The stock is currently trading at $71.47, down 0.2% in late trade on Wednesday.

Let's take a closer look at the latest news on the ASX 200 pizza giant.

Domino's shares still a buy despite backing out of Italy

Increasing competition reportedly weighed on Domino's in Italy as pandemic-induced restrictions saw more pizzerias turning to or providing delivery services.

Previously, the global pizza giant – which entered Italy as part of a franchising agreement – differentiated itself from other pizza makers by offering both delivery and American-style offerings, according to Bloomberg.

But while the pizza chain appears to have fizzled out in Italy, it's ramping up across the rest of the world. Domino's opened 432 stores over the 12 months ended 2 January.

It also noted it was on track to increase its network by more than 500 stores in financial year 2022. Finally, the giant aims to boast 4,000 stores next year.  

And that's why top broker Citi is bullish on the Domino's share price. It has slapped the stock with a $92.95 price target and a buy rating, as my Fool colleague James reports. The broker said:

Our 'buy' rating is predicated on potential upside from potential [merger and acquisition] activity, upside to long term store rollout, and sales on track to rebound later in [calendar tear 2022] once the business has cycled through the abnormal comps.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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