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(Sharecast News) - Berenberg initiated coverage of Domino's Pizza Group with a 'buy' rating and a 291p target price on Tuesday, arguing that the chain's value‑led proposition and the early success of its Chick 'N' Dip range leave the shares primed for a re‑rating after a period of weakness.
The broker said Domino's continued to take share in the £3bn UK pizza market as rivals struggle with slowing like‑for‑like volumes and rising costs. It stated the group should benefit from consumers trading down and eating at home more often, helping to support volumes and offset any potential impact from appetite‑suppressant drugs.
Berenberg described Chick 'N' Dip as potentially "transformational", estimating that sales have been 80% to 90% incremental and have lifted average order values from £26 to £36. Based on an attachment rate of 5% to 18% and incremental order growth of 0% to 3% through FY26-FY29, the broker said earnings could be materially higher, with its most bullish scenario implying FY29 earnings per share 37% above current consensus.
The German bank also highlighted Domino's scalable model, underpinned by around 14m active customers, five UK supply‑chain centres, a franchise‑led delivery network averaging 24‑minute fulfilment times, and a £90m marketing budget funded by franchisees. It expects margins to expand over the medium term, supported by Chick 'N' Dip‑driven operating leverage, automation investment and tighter cost discipline under the new management team.
Berenberg noted that short interest remains elevated at around 9%, which it said reflects forecasts that fail to capture the Chick 'N' Dip opportunity.
With the shares trading on roughly 12x FY26 earnings and yielding 5%, Berenberg sees scope for a re‑rating, forecasting a three‑year EPS compound annual growth rate of 5%, rising to 13% in its bullish case and implying total shareholder returns of 10% to 18% before any valuation uplift.
Deutsche Bank lifted its target price on Fevertree Drinks from 870p to 900p, but kept its 'hold' rating on the stock, saying the mixer brand faces a tougher backdrop in the US as premium spirits trends soften and ready‑to‑drink cocktails continue to reshape drinking habits.
The German bank noted that US premium‑spirits value fell 3.2% in 2025, a sharper drop than the wider spirits category, eroding what has historically been a key tailwind for Fevertree.
Moderation, it said, has increasingly favoured pre‑mixed convenience, with alcoholic RTDs growing 11% annually between 2019 and 2025 while conventional spirits volumes were flat - a shift that bypasses the mixer purchase entirely.
Deutsche Bank sees the clearest US opportunity in around 125,000 relevant on‑trade outlets, mirroring Fevertree's UK strategy of expanding beyond premium venues. Better off‑trade execution should also help, though sustaining momentum may require heavier marketing investment.
Convenience channels add roughly 100,000 potential outlets, but DB said the segment's $11.60 average basket and the dominance of energy and sports drinks - which make up 46% of packaged‑beverage sales - make it a challenging fit for Fevertree's premium positioning.
Deutsche said the long‑term US opportunity remains intact but requires patience, with the shares fairly valued at present despite the target‑price upgrade.
Reporting by Iain Gilbert at Sharecast.com
