On Thursday, Citi reaffirmed its Neutral stance on shares of Domino's Pizza (NYSE:DPZ), maintaining the stock's price target at $530.00. The focus of investor dissatisfaction is likely to be on the recent suspension of unit growth guidance by the company, which comes shortly after it had set new long-term targets just eight months prior. The suspension is attributed to circumstances beyond the company's control, specifically related to a master franchisee operating in France and Japan.
The unexpected change in guidance is anticipated to undermine investor confidence in the company's broader guidance and could exert pressure on the stock. Domino's Pizza has traditionally commanded a premium multiple compared to its global quick-service restaurant peers, thanks to perceived better visibility into its long-term business drivers.
According to Citi's assessment, the U.S. comparable sales growth was marginally weaker than what the firm and the broader market had anticipated. Moreover, general and administrative expenses surpassed expectations by 13% and 7%, respectively, as indicated by the company's management, which signaled a higher spend in the period.
This development is seen as specific to the Domino's brand, but there is an expectation that other fast-growing global quick-service operators may face similar pressures in the near term. The guidance shift reflects the challenges faced by the company in navigating external factors that impact its franchise operations and growth trajectory.
Domino's Pizza's stock performance and investor sentiment will be closely watched as the market processes the implications of the revised guidance and its potential impact on the company's future growth prospects.
In other recent news, Chipotle Mexican Grill (NYSE:CMG) has seen multiple firms revise their stock price targets. Truist Securities raised its target to $74, projecting Q2 sales of $2.96 billion and an earnings per share (EPS) estimate for Q2 2024 of $0.33. Stifel adjusted its target to $70, citing robust traffic, while Baird raised its target to $74, maintaining an Outperform rating.
Chipotle has also announced significant leadership changes. CFO Jack Hartung is set to retire on March 31, 2025, with Adam Rymer, the current Vice President of Finance, succeeding him as CFO starting January 1, 2025. Additionally, Jamie McConnell will take on the role of Chief Accounting and Administrative Officer on the same date.
The restaurant chain reported a 7% increase in comparable sales growth and total sales of $2.7 billion in Q1 2024, with digital sales accounting for 37% of total sales. The company also plans to open between 285 to 315 new restaurants throughout the year. These recent developments highlight the ongoing strategic and operational progress at Chipotle.
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