Domino's Pizza Cooled Off by Sell Rating at Deutsche Bank

Domino's is initiated with a sell rating and $208 price target by analysts at Deutsche Bank.
By Tony Owusu ,

Shares of Domino's Pizza (DPZ) - Get Report  were falling in premarket trading Monday after analysts at Deutsche Bank initiated coverage of the company with a sell rating and $208 price target.

The firm believes that intrusions from third-party delivery aggregators like Seamless and GrubHub (GRUB) - Get Report will be a headwind for the company as they proliferate.

"Simply put, we believe the aggregators are a problem for DPZ because they enable a material increase in delivery supply availability of additional restaurant menu types outside of QSR Pizza, which, in turn, creates an increase in delivery choices for DPZ's existing customer base," analyst Brian Mullan said. 

The firm is still bullish on the company's fundamentals, calling the company "very well run and managed," but the potential competition is just too much for the firm to be bullish on the stock. 

"If the market is missing anything at the current juncture, it is just how early the industry is in this journey. Off-Premise food consumption is not new, nor is the
ongoing consumer mix-shift towards Off-Premise food consumption. What is new, however, is the widespread availability of the delivery sales channel to virtually any QSR and Fast Casual restaurant in the country that wants it," Mullan said. 

The stock fell 1.95% to $254 in premarket trading.

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