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On Tuesday, JPMorgan set a new price target for Domino’s Pizza (NASDAQ:DPZ) shares at $460, up from the previous $440, while keeping a Neutral rating on the stock. With a current market capitalization of $16.91 billion and trading at a P/E ratio of 28.06, InvestingPro analysis indicates the stock is currently trading above its Fair Value. For deeper insights into Domino’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The adjustment comes despite the company’s first-quarter results for 2025 not meeting expectations. Analysts at JPMorgan noted that the stock closed slightly higher by 0.6% due to promising current quarter domestic same-store sales (SSS) trends, which they estimate to be in the mid-single digits. The positive performance is attributed to the introduction of Domino’s new stuffed crust pizza, which has created a halo effect around the product.
The analysts further mentioned that the expected addition of Domino’s to the DoorDash (NASDAQ:DASH) platform in May supports the company’s forecast of a 3% increase in U.S. comparable sales for the fiscal year 2025. According to InvestingPro data, the company maintains a strong financial health score of 2.89 (GOOD), with eight analysts recently revising their earnings estimates upward for the upcoming period. The company has also demonstrated its financial stability by raising its dividend for 11 consecutive years. However, they expressed caution due to several factors. Firstly, there is a longer-than-previously-expected ramp-up period for the third-party platform to achieve its goal of approximately $1 billion in incremental sales. Secondly, the momentum from the stuffed crust product, which is becoming more common in the market, may normalize. Lastly, the ongoing strategy of splitting stores raises questions about the necessity of adding more delivery capacity in a market where demand seems to be stagnating, as evidenced by the flat year-over-year demand in the first quarter.
Domino’s U.S. system comparable sales for the first quarter were slightly down by 0.5%, which did not align with JPMorgan’s prediction of a 1.5% increase. On the brighter side, the international segment outperformed expectations, with first-quarter comparable sales rising by 3.7%, surpassing JPMorgan’s forecast of 2.5% increase. The company’s overall revenue growth stands at 5.07% over the last twelve months, with analyst price targets ranging from $414 to $555, reflecting diverse market perspectives. Get access to more than 10 additional InvestingPro Tips and comprehensive financial metrics by subscribing to InvestingPro. The analysts indicated that this might be the peak performance for the international segment for the rest of the year.
In other recent news, Domino’s Pizza reported its first-quarter earnings for 2025, revealing an earnings per share (EPS) of $4.33, surpassing the consensus estimate of $4.06. Despite this earnings beat, the company experienced a slight decline in U.S. same-store sales, which fell by 0.4%, missing the expected 2.0% growth. Domino’s international comparable store sales, however, showed a strong increase of 3.7%, outperforming expectations. Analysts from various firms have adjusted their outlooks on Domino’s stock, with Benchmark, UBS, BMO Capital, and Loop Capital all raising their price targets, ranging from $535 to $564, while maintaining positive ratings. Benchmark noted Domino’s potential for continued strong same-store sales performance, driven by new product introductions and strategic partnerships. BMO Capital highlighted the company’s robust international sales and effective cost management as key factors in its positive momentum. UBS analysts expressed optimism about Domino’s strategic initiatives, anticipating significant sales improvement later in the year. Meanwhile, Bernstein acknowledged Domino’s ability to manage operations amid economic challenges, maintaining a Market Perform rating with a new price target of $460.
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