Domino's Pizza Enterprises' FY20 result was in line with Morgan Stanley's estimates except for in ANZ and Europe due to covid-19 related disruptions.

The broker calculates net headwind from covid-19 to be -$15-18m in ANZ and Europe, which dragged down the second half operating income by circa -14% in both regions. Japan did very well with second-half operating income growth of 58%, observes the broker.

A stronger-than-expected start to FY21 prompts the broker to increase its FY21-23 earnings forecast, aided by strong momentum and the increase in scale in Japan creating a stronger platform for long-term growth.

The key focus here will be on retaining new customers, adds Morgan Stanley.

Equal-weight rating reiterated. Target is raised to $70 from $55. Industry view is Cautious.

Sector: Consumer Services.

Target price is $70.00.Current Price is $83.20. Difference: ($13.20) - (brackets indicate current price is over target). If DMP meets the Morgan Stanley target it will return approximately -19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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