On Thursday, Domino's Pizza Inc. (NYSE:DPZ) retained a positive outlook from BTIG following the company's earnings report. Despite a dip in the stock price, BTIG upheld its Buy rating and $580.00 price target for the pizza chain's shares. The firm views the current market reaction as an overstatement of concerns, particularly regarding the international development forecast.
According to BTIG, the anticipated reduction in international expansion will have a minimal impact, less than 0.5%, on Domino's earnings for the next year. This slowdown is seen as a part of the company's usual business adjustments that it has successfully navigated in the past. BTIG emphasizes that the core domestic strategy of Domino's is on point, with the company increasing its market share and attracting customers across various income levels, even as the wider industry faces challenges.
The earnings report did reveal some issues, but BTIG believes these are minor compared to the company's overall advancements. The analyst firm remains optimistic about Domino's stock, citing confidence in the management's ability to drive long-term growth and profitability.
BTIG's sustained Top Pick designation for Domino's reflects a belief in the company's execution of its domestic operations and its potential to continue outperforming within the sector. The firm's statement reinforces the idea that the current share price weakness does not align with the underlying business strengths and future prospects of Domino's Pizza.
In other recent news, Domino's Pizza Inc. reported second-quarter sales growth of 4.8%, slightly below the anticipated 4.91%, reflecting cautious consumer spending. Despite intense competition, the company exceeded profit expectations, earning $4.03 per share against the predicted $3.68. Domino's also reported a second-quarter gross margin increase to 39.8% from 39.5% the previous year, supported by strong advertising revenue and franchise royalties and fees. The company's overall revenue hit the target with a reported $1.10 billion for the quarter.
In response to flat growth forecasts, Domino's Pizza Enterprises announced plans to close several underperforming stores in Japan and France. Analysts from Macquarie and UBS noted that while the move towards profitability is wise, it is expected to result in a near-term negative impact on earnings projections. Following these developments, Morgan Stanley and Macquarie adjusted their earnings estimates downwards.
Loop Capital maintained its Hold rating on Domino's Pizza, and Baird upgraded the company's shares from Neutral to Outperform, raising its price target to $580. These adjustments reflect confidence in Domino's business strategies and market positioning. Domino's remains committed to its long-term forecast, expecting more than 7% annual global retail sales growth. These are among the recent developments for Domino's Pizza.
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