JP Morgan has initiated coverage of Domino’s Pizza Group PLC (LSE:DOM), the UK master franchise holder for the pizza delivery brand, assigning an underweight rating from the outset.
The bank has set a price target of 145p for December 2027, implying downside of approximately 25% from current trading levels.
Analyst Borja Olcese said the cautious stance reflected a combination of structural, operational and execution risks not fully reflected in the current valuation.
JP Morgan’s forecasts sit materially below consensus, leaving the risk-reward skewed to the downside in the bank’s view.
The underweight rating is the lowest on JP Morgan’s three-tier scale, signalling the bank expects shares to underperform the broader market.
A price target set 25% below current levels places JP Morgan among the most bearish voices currently covering the stock.
The bank framed its concerns around the durability of the company’s growth, pointing to challenges the market has yet to fully price in.
Domino’s Pizza Group operates and franchises pizza outlets across the UK and Ireland, holding the master franchise rights for the globally recognised brand in those territories.
For investors seeking a comparable investment in the sector, JP Morgan said it preferred bakery chain Greggs, which it rates overweight.
The note marks a downbeat start to coverage for Domino’s, and markets responded swiftly to the negative initiation from one of Wall Street’s most prominent banks.
In afternoon trading following the note’s release, shares in DOM were down 3% at 185.3p, reflecting investor unease over the bank’s bearish assessment.
The initiation adds fresh pressure on Domino’s management to demonstrate that the growth drivers underpinning the current valuation remain intact and credible to the market.
