Domino’s: Uber Eats Deal Looks Intriguing but Not Transformational; We Maintain Our $385 FVE

Wide-moat Domino's announced a partnership with narrow-moat Uber this morning to offer the pizza chain's fare to Uber Eats customers globally. With our assessment that customer overlap between delivery aggregators and the value-oriented chain is limited, in tandem with Uber Eats' relatively small share of food delivery in the firm's largest U.S. markets (23% in February of this year, according to Statista data), we don't expect the decision to prove transformational, and consequently don't expect to move our $385 fair value estimate meaningfully. Shares shot up roughly 11% in intraday trading, bringing the stock, which has long been our top restaurant pick, into a range we'd consider fairly valued.