On Friday, Guggenheim Securities adjusted Domino's Pizza Inc.'s (NASDAQ:NYSE:DPZ) future financial outlook by reducing its price target from $460 to $450 while maintaining a Neutral rating on the company's shares. Currently trading at $412.69, near its 52-week low of $396.06, the stock maintains a P/E ratio of 25.16. The revision reflects a reassessment of the pizza chain's earnings projections for the coming years.
Guggenheim analysts have modified their expectations for Domino's Pizza's earnings per share (EPS) for 2025 and 2026, decreasing them to $17.25 and $18.70, respectively, from the previously estimated $17.70 and $19.40.According to InvestingPro, Domino's shows several promising indicators, with 10+ additional exclusive insights available to subscribers.
The firm's analysts provided insight into the rationale behind the price target adjustment, noting that Domino's Pizza is one of the few restaurant chains with a clear potential sales boost in 2025, which could come from an anticipated launch on the delivery platform DoorDash (NASDAQ:DASH). This potential catalyst comes as the company maintains strong financial health, with a current ratio of 1.71 and revenue growth of 4.41% over the last twelve months. This factor, coupled with Domino's lesser exposure to foreign exchange risks compared to its quick-service restaurant peers, was highlighted as a positive aspect of the company's outlook.
Despite acknowledging these potential catalysts for Domino's Pizza, Guggenheim expressed concerns about the consensus on international unit growth, suggesting that there might be more downside risk than upside potential. The analysts indicated that if international unit growth falls short of expectations, it would be challenging for the company's valuation multiple to expand.
The Neutral rating by Guggenheim implies that the firm's analysts are advising investors to hold their positions in Domino's Pizza stock without making additional purchases or sales. The rating and price target reflect Guggenheim's expectation of the stock's performance and are based on their analysis of the company's earnings potential and market position.
Domino's Pizza, headquartered in Ann Arbor, Michigan, operates a network of company-owned and franchise restaurants worldwide, known for its pizza delivery and carryout services. The company's stock performance and future earnings are closely watched by investors and analysts in the restaurant and food service industry.
In other recent news, Domino's Pizza has announced several key developments. The pizza giant reported a 6.6% increase in U.S. retail sales and a 5.1% growth in global retail sales for the third quarter, marking its fourth consecutive quarter of same-store sales growth. The company has also appointed Kate Trumbull as the new Executive Vice President and Chief Marketing Officer, a move expected to further bolster its global marketing strategies.
Domino's Pizza intends to change its stock exchange listing from the New York Stock Exchange to the Nasdaq Global Select Market, a transition scheduled to take place after the market closes on December 31, 2024. Analysts from Loop Capital upgraded Domino's Pizza from Hold to Buy, setting a new price target of $559, following an uptick in same-store sales growth. However, Bernstein SocGen Group revised Domino's financial outlook, reducing the price target while maintaining a Market Perform rating due to concerns over U.S. delivery sales.
The company continues to refinance debt at lower rates, supporting an aggressive share buyback program. Domino's Pizza has already purchased $190 million out of $215 million in year-to-date share buybacks in the third quarter alone.
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