Broker snap: Panmure slices estimates at Domino's

9th Jun 2011 12:48

Panmure Gordon has reduced its earnings forecasts for Domino's Pizza, reflecting the impact of start-up losses as part of the group's German expansion.The broker thinks that Germany is already a competitive pizza market and that hitting its target of opening 400 stores in ten years appears ambitious."Management guidance is that expansion into Germany will dilute earnings per share (EPS) by circa 3-4% per annum [in] 2011-13."After factoring in the reduced tax charge following the UK government budget (reduction in corporation tax), this equates to a 2% cut to EPS estimates.The broker keeps its 'sell', but scales back its target price slightly to 345p, from 350p.---BC