Citi cuts Domino's Pizza stock price target to $480 from $500

On Thursday, Citi analysts adjusted their outlook on Domino's Pizza (NASDAQ:DPZ) shares, reducing the price target to $480 from the previous $500 while retaining a Neutral rating on the stock. Currently trading at $456.35, the company, with a market cap of $15.65 billion, appears overvalued according to InvestingPro analysis. The revision comes ahead of the company's first-quarter earnings, where the analysts anticipate a slight decline in U.S. same-store sales (SSS), projecting a 0.5% decrease compared to the general market expectation of a 0.4% increase.

The analysts expressed particular interest in how the introduction of Stuffed Crust has influenced demand, suggesting that the product's ramp-up might have been slower than initially anticipated since its launch. Despite these challenges, Domino's has maintained strong financial health, with a 28.4% gross profit margin and consistent dividend payments for 14 consecutive years. Additionally, there is curiosity around how the DASH platform will integrate into Domino's operations, especially given the current challenges facing the core delivery business.

Citi's commentary highlighted concerns that unless new product introductions or third-party delivery (3PD) expansions stimulate at least 3% growth in U.S. comparable sales in 2025, the company's stock multiple could face risks. This pressure is compounded by the fact that Domino's unit growth has remained below the targets set in late 2023. Furthermore, the analysts noted that these issues are occurring against a backdrop of heightened global economic uncertainty.

The assessment by Citi underscores the challenges Domino's Pizza faces in maintaining growth and market expectations. The company's strategies, including product innovation and platform development, are being closely watched by investors as potential catalysts for future performance. As Domino's prepares to report its first-quarter results, the market will be looking for signs of how these factors are playing out and influencing the company's trajectory.

In other recent news, Domino's Pizza has announced a partnership with DoorDash (NASDAQ:DASH) to enhance its delivery service. This collaboration will allow customers to place orders via the DoorDash app, with Domino's drivers handling deliveries. The partnership aims to boost Domino's reach in the U.S. and will expand to Canada in late 2025. Meanwhile, RBC Capital Markets has maintained an Outperform rating on Domino's, with a price target of $500.00, highlighting the potential impact of the company's new stuffed crust offering on sales and earnings.

Additionally, TD Cowen has reiterated a Buy rating with a $490.00 price target, citing Domino's robust expansion plans for 2025, which include 210 new domestic store openings. Stifel analysts also maintain a Buy rating and a $500.00 price target, noting the company's initiatives to increase market share despite challenges from weaker consumer spending. These developments reflect Domino's strategic efforts to expand its market presence and improve its financial performance.

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