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On Tuesday, Barclays (LON:BARC) analyst Jeffrey Bernstein revised the price target for Domino’s Pizza (NASDAQ:DPZ) shares to $420 from the previous target of $425, while maintaining an Underweight rating on the stock. Currently trading at $490.64, with a market capitalization of $16.8 billion, InvestingPro data shows the stock trading at relatively high valuation multiples. The adjustment follows Domino’s Pizza’s first quarter performance for the year 2025, which did not meet expectations due to weaker-than-anticipated U.S. comparable sales and earnings growth, excluding an unrealized gain in China.
Bernstein noted that international comparable sales growth exceeded expectations, showing a reacceleration in line with quick-service restaurant (QSR) peers. The company has demonstrated solid financial performance, with revenue growing at 5.07% over the last twelve months. Domino’s sales are roughly split evenly between the U.S. and international markets, but profits are more heavily weighted towards the U.S., with approximately 70% of profits coming from domestic operations and 30% from international.
Despite the underwhelming first quarter, Domino’s has reiterated its full-year 2025 guidance, initially provided on February 24, 2025. The guidance anticipates an uptick in U.S. comparable sales, driven by the introduction of the Stuffed Crust pizza platform in early March and a partnership with DoorDash (NASDAQ:DASH) slated for May. These initiatives are expected to generate higher comparable sales for both delivery and carryout services compared to peers. The company maintains a dividend yield of 1.42% and has shown strong momentum with a 19.63% price return over the past six months.
Bernstein expressed concerns over Domino’s ability to return to its historically premium valuation compared to other large-cap, multinational, franchised QSR peers. With U.S. comparable sales falling short and an assumed second-half acceleration in 2025 amidst a challenging economic environment, he suggested that the company’s valuation gap should close. Domino’s Pizza is currently trading at approximately 19 times its estimated 2026 EBITDA, while its peers, such as McDonald’s (NYSE:MCD), Yum! Brands (NYSE:YUM), and Restaurant Brands International (NYSE:QSR), are trading at around 16 times. For deeper insights into Domino’s valuation metrics and comprehensive analysis, InvestingPro subscribers can access detailed financial health scores and additional ProTips in the exclusive Pro Research Report.
Barclays is also acting as Corporate Broker and Financial Advisor to Deliveroo (OTC:DROOF) PLC, which recently received a potential offer from DoorDash Inc. This relationship with Deliveroo was disclosed in Bernstein’s commentary.
In other recent news, Domino’s Pizza reported its first-quarter 2025 earnings, surpassing earnings per share (EPS) expectations with an actual EPS of $4.33, compared to the forecasted $4.00. However, the company faced a revenue shortfall, reporting $1.11 billion against the expected $1.13 billion. Despite the mixed results, Goldman Sachs maintained a Buy rating with a price target of $530, and Evercore ISI raised its price target to $520, anticipating growth in U.S. same-store sales in the latter half of 2025. Wells Fargo (NYSE:WFC) also adjusted its price target to $465, noting the company’s "expectedly soft" first-quarter performance. Meanwhile, Stifel increased its target to $510, citing confidence in Domino’s strategic initiatives, such as the Parmesan Stuffed Crust Pizza and value promotions. Domino’s international same-store sales exceeded expectations, growing by 3.7%, while U.S. same-store sales saw a slight decline of 0.5%. The company anticipates a 3% growth in U.S. same-store sales for 2025, driven by strategic initiatives like the upcoming national launch of a partnership with DoorDash. Despite challenges, Domino’s continues to gain market share and remains focused on its growth strategies.
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