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Oppenheimer expects 'share gains to sustain' for Domino's, boosts PT by $50

Published 04/30/2024, 08:22 PM
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On Tuesday, Oppenheimer modified its outlook on Domino's Pizza (NYSE:DPZ), increasing the price target to $580 from the previous $530 while maintaining an Outperform rating. This adjustment comes after Domino's reported first-quarter results that exceeded expectations, particularly in same-store sales (SSS), which saw a 5.6% increase compared to the Street's estimate of 4.2%.

The company's performance was attributed to significant share gains, which were primarily driven by increased customer traffic. Oppenheimer's analysis suggests that these gains are likely to continue, bolstered by Domino's ongoing initiatives, such as its loyalty program and partnerships with third-party delivery services. The firm also commended Domino's for its value pricing strategy, which has been well-received by consumers.

Despite the positive sales momentum, Domino's management chose to maintain a conservative outlook for the 2024 fiscal year, reiterating its expectation for "flattish" EBIT margins. Oppenheimer views this stance as prudent given the current market conditions.

After conducting discussions with Domino's management and reevaluating the company's financials, Oppenheimer slightly adjusted its earnings per share (EPS) forecast for 2024 and raised its 2025 EPS estimates above the consensus. The firm's renewed confidence in Domino's growth trajectory and financial health is reflected in the revised price target, signaling a bullish perspective on the pizza chain's stock.

InvestingPro Insights

As Domino's Pizza (NYSE:DPZ) garners a positive outlook from Oppenheimer, real-time data from InvestingPro aligns with the sentiment of growth and strong performance. With a market capitalization of $18.36 billion, Domino's showcases a robust financial standing. The company's revenue for the last twelve months as of Q1 2024 stands at $4.54 billion, with a slight quarterly growth of 5.88%, indicating an upward trend in sales. The gross profit margin during the same period is healthy at 28.48%, supporting the company's ability to maintain profitability amidst market challenges.

InvestingPro Tips highlight that Domino's has raised its dividend for 10 consecutive years, with a notable dividend growth of 24.79% in the last twelve months as of Q1 2024. This consistent return to shareholders is a testament to the company's financial health and commitment to investor value. Additionally, the stock has seen a significant return over the last week, with a 9.55% total price return, suggesting investor confidence following the recent earnings report. However, with an adjusted P/E ratio of 34.92 and the stock trading near its 52-week high, investors are paying a premium for this performance. For those interested in exploring further insights, there are 16 additional InvestingPro Tips available for Domino's Pizza at https://www.investing.com/pro/DPZ. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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