BMO raises Domino’s Pizza stock target to $540, maintains Outperform

On Tuesday, BMO Capital Markets adjusted its outlook on Domino’s Pizza (NASDAQ:DPZ) shares, raising the price target to $540 from the previous $515, while continuing to endorse the stock with an Outperform rating. The revision follows Domino’s Pizza’s first-quarter earnings for 2025, which surpassed market expectations. The company reported earnings per share (EPS) of $4.33, exceeding the consensus estimate of $4.06. This beat was attributed to a gain on investment, robust international comparable sales, reduced general and administrative (G&A) expenses, and slightly improved supply chain profits.

Domino’s Pizza has confirmed its financial targets for 2025, projecting approximately 6% growth in global retail sales, around 8% growth in operating profit, and a 3% increase in U.S. comparable sales growth, with the latter expected to be more pronounced in the second half of the year due to the Deployment of Accelerated Service Hub (DASH) initiatives. Despite acknowledging potential macroeconomic risks, the company’s outlook remains unchanged. With a market capitalization of $16.8 billion and a P/E ratio of 27.95, InvestingPro analysis indicates the stock is trading at premium valuations relative to near-term earnings growth potential.

BMO Capital’s analysts have increased their EPS estimates for Domino’s Pizza for the years 2025 and 2026 in light of the recent performance and ongoing growth strategies. The firm’s analysts believe that Domino’s Pizza presents a compelling investment opportunity, particularly as it demonstrates the potential for re-acceleration in U.S. comparable sales. This optimism is based on visible sales drivers and the possibility of the company’s multiple expanding as these developments unfold. The company has maintained an impressive track record of raising dividends for 11 consecutive years, currently offering a 1.42% yield, while achieving a solid revenue growth of 5.07% over the last twelve months.

Domino’s Pizza’s strong international performance and effective cost management have contributed to the company’s positive momentum. With the reaffirmed guidance, Domino’s Pizza demonstrates confidence in its business model and growth trajectory despite the external economic environment.

Investors and market watchers will likely keep a close eye on Domino’s Pizza’s progress as it continues to execute its strategic initiatives and aims to deliver on its financial goals. The upward revision of the price target by BMO Capital signifies a vote of confidence in the pizza chain’s ability to maintain its growth pace and potentially enhance shareholder value.

In other recent news, Domino’s Pizza reported a first-quarter earnings per share (EPS) of $4.33, surpassing estimates from Loop Capital and Goldman Sachs, which were $3.98 and $4.12, respectively. Despite this earnings beat, U.S. same-store sales saw a decline, falling short of expectations, while international sales exceeded forecasts with a 3.7% increase. Analysts have reacted to these results with varied outlooks. Loop Capital raised its price target to $564, citing strong international growth, while RBC Capital also increased its target to $550, highlighting market share gains despite consumer challenges.

Conversely, Barclays (LON:BARC) reduced its price target to $420, expressing concerns over U.S. sales performance and valuation compared to peers. Goldman Sachs maintained a Buy rating with a $530 target, noting potential market share gains and strategic initiatives like the Stuffed Crust Pizza launch. Evercore ISI raised its target to $520, expecting mid-single-digit growth in U.S. same-store sales and continued market share expansion. These developments reflect a diverse range of expectations for Domino’s Pizza’s future performance amidst a challenging economic environment.

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