Domino's Pizza stock price target cut to $490 by TD Cowen

Furthermore, Charles believes that the premium is justified due to the scarcity of quick-service restaurants successfully navigating the challenges of stretched lower-income consumer spending. The strength of Domino's U.S. development and proactive international strategies are also contributing factors to the analyst's positive outlook on the stock. For deeper insights into DPZ's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which includes detailed analysis of the company's competitive position and financial metrics. For deeper insights into DPZ's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which includes detailed analysis of the company's competitive position and financial metrics.

The analyst anticipates a quarter-to-quarter acceleration in average weekly sales (AWS) from the third to the fourth quarter, which is consistent with historical trends. With revenue growth of 4.41% and a market capitalization of $15.31 billion, the company shows solid fundamentals. The expected transaction growth of 0.2% in the fourth quarter is believed to benefit from several promotional strategies implemented by Domino's Pizza (NYSE:DPZ), including the MOREflation deal, the Emergency Pizza promotion, and the 50% Boost Week. These initiatives are expected to drive transaction growth, especially when compared to the previous year's successful revamp of the Domino's Rewards loyalty program. InvestingPro data reveals the company maintains a GOOD financial health score, supported by strong profitability metrics.

The reduction in the price target to $490 is a result of applying a 27 times price-to-earnings ratio (P/E) to the firm's revised fiscal year two estimates, a slight decrease from the approximately 28 times P/E ratio previously used. Charles notes that this target multiple signifies a 42% premium over the S&P 500, aligning with the five-year historical average. The analyst underscores that the premium is warranted, given Domino's Pizza's "superior story today" compared to the years 2019 and 2022-2023, and the company's promising U.S. initiatives that are expected to sustain positive traffic growth.

Furthermore, Charles believes that the premium is justified due to the scarcity of quick-service restaurants successfully navigating the challenges of stretched lower-income consumer spending. The strength of Domino's U.S. development and proactive international strategies are also contributing factors to the analyst's positive outlook on the stock.

In other recent news, Domino's Pizza has reported a 6.6% increase in U.S. retail sales and a 5.1% growth in global retail sales for the third quarter, marking its fourth consecutive quarter of same-store sales growth. The company has also announced plans to change its stock exchange listing from the New York Stock Exchange to the Nasdaq Global Select Market. Analysts from various firms have provided mixed outlooks on the company. Morgan Stanley (NYSE:MS) retains an Overweight rating on Domino's, citing potential growth drivers such as expanded third-party delivery services and ongoing product and technological innovations. However, Guggenheim Securities maintains a Neutral rating, reflecting a reassessment of the pizza chain's earnings projections for the coming years. Loop Capital upgraded Domino's Pizza from Hold to Buy, setting a new price target of $559, following an uptick in same-store sales growth. In leadership changes, the company appointed Kate Trumbull as the new Executive Vice President and Chief Marketing Officer, expected to enhance its global marketing strategies. These are the recent developments in Domino's Pizza's business operations.

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