Piper Sandler has shown modest confidence in Domino's Pizza (NYSE: NYSE:DPZ) by increasing the price target on the company's stock to $422 from the previous $415 while keeping a Neutral rating.
The adjustment came after Domino's reported its third-quarter results for the fiscal year 2024.
Domino's Pizza revealed a domestic same-store sales (SSS) increase of 3.1%, which, despite falling short of the consensus, aligned with the investor expectations that had been adjusted earlier in the week.
The company's performance in the domestic market continues to surpass that of its competitors, both within the pizza segment and the broader restaurant industry. This consistent outperformance is seen as a positive sign.
However, the international segment did not meet expectations in terms of same-store sales and net unit growth. In light of these results, Domino's has forecasted a global retail sales growth of 6% for the fiscal year 2025, which is below the long-term projections shared at the company's Investor Day towards the end of the previous year.
Despite this, Domino's has maintained its forecast for adjusted operating income growth, anticipating an approximate 8% increase. This projection holds even after the company's top-line outlook for the upcoming year was revised downward. The company's ability to sustain its income growth expectations amidst the adjustments to sales forecasts reflects a degree of resilience in its operational strategy.
In other recent news, Domino's Pizza saw a series of adjustments in its stock price targets following its third-quarter earnings report. The pizza chain reported earnings per share of $4.19, surpassing the estimated $3.65. However, the company fell short of expectations with a 3% increase in U.S. same-store sales and a 0.8% increase in international sales.
Analyst firm Stephens cut Domino's target to $420, citing the company's cautious outlook for fiscal year 2025. Meanwhile, Baird maintained an Outperform rating with a steady price target of $535, expressing confidence in the company's profit outlook for 2024-2025. RBC Capital lowered the target to $490, citing revised estimates after revenues missed expectations by 1.6%.
Jefferies trimmed the price target for Domino's to $450 while keeping a Hold rating. TD Cowen held its Buy rating and a price target of $475, emphasizing Domino's strong strategic approach. BTIG reduced the stock's price target to $500 from the previous $580, but still recommended a Buy rating.
InvestingPro Insights
Domino's Pizza's recent performance and Piper Sandler's price target adjustment can be further contextualized with real-time data from InvestingPro. The company's market capitalization stands at $14.3 billion, with a P/E ratio of 25.4, indicating investor confidence in its future earnings potential. This aligns with the InvestingPro Tip that analysts predict the company will be profitable this year.
Despite the challenges in international markets, Domino's has shown resilience in its financial metrics. The company's revenue for the last twelve months as of Q2 2024 was $4.61 billion, with a modest growth of 2.28%. More impressively, Domino's boasts an operating income margin of 18.5%, showcasing its ability to maintain profitability even in a competitive market.
An InvestingPro Tip highlights that Domino's has raised its dividend for 11 consecutive years, reflecting a commitment to shareholder returns. This is particularly noteworthy given the company's ability to maintain its adjusted operating income growth forecast despite revising its top-line outlook.
For investors seeking a deeper understanding of Domino's financial health and future prospects, InvestingPro offers 6 additional tips that could provide valuable insights into the company's investment potential.
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