Domino's shares fall amid price downgrades

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Inside Franchise Business: Domino's shares fall amid price downgradesDomino's Pizza shares have plunged to their lowest level in more than a month as investors dumped the stock amid analysts' downgrades.

Shares in the fast food company dropped $4.92, or 9.1 per cent, to $48.92 on Thursday, hitting their lowest level since the end of May.

The slump came after analysts at Credit Suisse issued a report slicing Domino's price target to $36.76 from $42.47, citing concerns over a federal parliamentary inquiry into the franchise industry, rising labour costs and questionable growth prospects in Japan and Europe.

The joint federal parliamentary committee inquiry into the franchise industry is due to deliver its final report by September 30 this year.

Citi also slashed the fast food operator's rating due to expectations that weakness in Japan will lead to earnings downgrades in financial year 2019, setting a price target of $46.30.

IG market analyst Kyle Rodda said investors would likely continue to offload the stock throughout Thursday's trading session.

"There is some pretty aggressive selling going on and we haven't come close just yet to selling down to the price target set by Citi or Credit Suisse," he said.

Source: AAP

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