Domino’s Pizza stock rating reiterated at Buy by UBS on strong sales drivers

Investing.com - UBS has reiterated its Buy rating and $540.00 price target on Domino’s Pizza (NASDAQ:DPZ), currently trading at $419.85 with a market capitalization of $14.27 billion. According to InvestingPro analysis, the stock is trading near its 52-week low, with the company showing better-than-expected U.S. comparable sales despite macroeconomic headwinds.

The pizza chain has maintained its 2025 guidance, including U.S. and international same-store sales growth of 3% and 1-2% respectively, with approximately 8% operating income growth driven by roughly 6% global retail sales growth, excluding foreign exchange impacts. InvestingPro data shows the company maintaining a healthy revenue growth of 3.92% and a P/E ratio of 24.41, though trading at a relatively high multiple relative to near-term earnings growth.

Domino’s management acknowledged that sales trends have slowed across the U.S. restaurant industry in the fourth quarter to date due to increasing macroeconomic pressure, but reiterated its +3% U.S. same-store sales target for 2025, implying approximately 3.5% growth in the fourth quarter.

The company expects continued sales contributions from its Parmesan Stuffed Crust, $9.99 Best Deal Ever promotion, and the DoorDash partnership, with potential for additional marketing, value offerings, and menu innovations.

International same-store sales were modestly lower than expected, but UBS anticipates the upper end of the 2025 same-store sales target is achievable given momentum in key markets, provided the macroeconomic and geopolitical environment remains stable. With an overall Financial Health Score of GOOD from InvestingPro, which offers comprehensive analysis and 8 additional ProTips for this stock, investors can access detailed insights through the platform’s exclusive Pro Research Report.

In other recent news, Domino’s Pizza reported third-quarter results that surpassed analyst expectations, driven by a successful "Best Deal Ever" promotion. The company achieved U.S. systemwide same-store sales growth of 5.3%, exceeding the consensus forecast of 4.1%, with a notable increase in carryout sales. Domino’s also reported earnings per share of $4.08, outperforming the anticipated $3.97, despite a minor negative impact from its DPC Dash business. Benchmark has maintained its Buy rating with a price target of $540, while Evercore ISI adjusted its target to $510, citing better-than-expected profitability. Jefferies increased its price target to $465, acknowledging the company’s improved sales and cost management. Meanwhile, KeyBanc reiterated its Sector Weight rating, highlighting positive consumer response to Domino’s value initiatives and delivery partnerships. These developments reflect Domino’s strong performance and strategic initiatives in the latest quarter.

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