Down 22% in FY24, what's in store for Domino's Pizza shares in FY25?

Many analysts have a positive view.

| More on:
domino's pizza share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Domino's Pizza Enterprises Ltd (ASX: DMP) shares had a difficult end to FY24 and are down 27% in the past 12 months. They are currently swapping hands at $35.02 per share.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is around 2% higher over the same time.

Investors were quick to unload their stock in the company after it released a trading update in January, advising its H1 FY24 profit numbers were lower than expected.

The forewarning – whilst polite – was not received well by the market. The stock fell from above $57 to $39.50 in just one session.

I'm not sure the FY24 listing of Guzman Y Gomez Ltd (ASX: GYG) made things any easier for the stock either.

As we look ahead to FY25, investors are keen to understand what the future might hold for Domino's Pizza shares. Here's what the experts are saying.

Created with Highcharts 11.4.3Domino's Pizza Enterprises PriceZoom1M3M6MYTD1Y5Y10YALL3 Jul 20233 Jul 2024Zoom ▾Sep '23Nov '23Jan '24Mar '24May '24Jul '24Oct '23Oct '23Jan '24Jan '24Apr '24Apr '24www.fool.com.au

Could Domino's Pizza shares rebound in FY25?

Analysts are optimistic about the potential for a rebound in Domino's Pizza shares. According to investment bank Citi, based on its target price of $44.50 per share, Domino's could see a 22% increase.

This bullish outlook follows the company's investor tour in France, where Citi analyst Sam Teeger noted the potential for "better days ahead" despite recent struggles.

Analysts at Goldman Sachs also attended the tour. In a May note, the broker highlighted a positive shift in management's focus towards improving store profitability.

We view more positively a higher management commitment to store unit profitability via lifting Average Weekly Unit Sales (AWUS) largely via Average Weekly Order Count (AWOC) with a combination of higher aggregator contribution, fixing carry-out, new product development as well as higher brand marketing.

It also notes the pizza chain's new third-party partnerships, such as Uber Eats in France, as another potential driver of growth.

What are the other drivers for Domino's Pizza shares?

Citi isn't alone in its optimism. Ord Minnett also sees significant upside potential, rating Domino's Pizza shares a buy with a price target of $44.40.

Otherwise, the stock is rated a buy from the consensus of analyst estimates, per CommSec.

This confidence stems from expected growth in sales and earnings as the company adapts to changing consumer preferences and market conditions.

Domino's long-term expansion strategy is a critical factor in this. According to my colleague Tristan, the company aims to approximately double its total store count by 2033.

It is specifically targeting growth in Europe and Asia Pacific, but in Australia and New Zealand, it plans to reach 1,200 stores by 2027/2028. This growth may or may not positively affect Domino's Pizza shares.

Goldman Sachs explained that Domino's management is focused on improving the company's unit economics. Efforts include reducing food and delivery costs, increasing digital spending to attract new customers, and enhancing product quality and delivery times.

The broker noted that "management will also lean further into digital initiatives, including Germany stepping up loyalty rewards in CY24, rolling out digital kiosks…". Digital kiosks – what a time to be alive.

Challenges and risks ahead

Despite the optimistic projections, there still could be risks to consider. Morgan Stanley's analysis into GLP-1 weightloss drugs highlights the potential impact of labels such as Ozempic.

The thinking is that widespread use of the compound could reduce the consumption of high-calorie foods, including pizza. If correct, this could pose a challenge for Domino's Pizza shares.

Goldman Sachs also points out that while there is a positive shift towards improving store profitability, "current franchisee payback periods at ~4-5 years for Germany and Netherlands and ~4.5-6 years for France vs target of ~3 years" indicate that there is still work to be done.

Foolish takeaway

If Citi and Ord Minnett's positive forecasts hold true, Domino's shares could see a significant rebound in FY25. The company is positioned for potential growth with ambitious expansion plans and efforts to improve profitability. As always, it is crucial to weigh the risks and stay informed before investing.

Should you invest $1,000 in Analytica right now?

Before you buy Analytica shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Analytica wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

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

More on Consumer Staples & Discretionary Shares

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Consumer Staples & Discretionary Shares

After presenting at the 2025 Macquarie Conference, Macquarie tips 39% upside for this consumer discretionary stock

Is now the time to buy low on this penny stock?

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Treasury Wine Estates shares down 21% this year amid resurgent China demand

Are Treasury Wine Estates shares a bargain?

Read more »

I young woman takes a bite out of a burrito n the street outside a Mexican fast-food establishment.
Consumer Staples & Discretionary Shares

Guzman Y Gomez shares are down 22% this year. Time to buy?

Should I buy the dip in Guzman Y Gomez shares?

Read more »

supermarket asx shares represented by shopping trolley in supermarket aisle
Dividend Investing

Should I buy Coles shares for their reliable passive income?

We take a look at Coles’ passive income credentials and the potential for share price gains.

Read more »

man looks at phone while disappointed
Consumer Staples & Discretionary Shares

Guess which ASX 300 stock is down 9% on guidance downgrade

Investors are rushing to the exits today. But why? Let's find out.

Read more »

Supermarket trolley with groceries going up the stairs with a rising red arrow.
Consumer Staples & Discretionary Shares

Woolworths shares have soared 18% since March. Here's how much upside Macquarie still expects

Having raced higher since March’s multi-year lows, just how high can Woolworths shares go?

Read more »

A customer and shopper at the checkout of a supermarket.
Consumer Staples & Discretionary Shares

Broker watch: Are Woolworths shares a buy?

Do analysts think this supermarket giant would be a good pick for investors? Let's find out.

Read more »

Supermarket trolley with groceries on top of a red pointing arrow.
Consumer Staples & Discretionary Shares

Up 31% in a year, just how much more upside does Macquarie tip for Coles shares?

Can Coles shares smash the ASX 200 returns again in the year ahead?

Read more »