UBS maintains buy on Domino’s Pizza stock with $540 target

On Tuesday, UBS analyst Dennis Geiger reaffirmed a Buy rating on Domino’s Pizza (NASDAQ:DPZ) shares, maintaining a $540.00 price target. According to InvestingPro data, analyst consensus remains bullish with a target range of $415-$555, though 12 analysts have recently revised earnings downward. Geiger’s assessment followed Domino’s mixed fourth-quarter results, which revealed challenges in the U.S. same-store sales (sss) and some uncertainty regarding the 2025 outlook due to limited information on forthcoming sales initiatives. Despite these issues, the analyst pointed out the stronger international performance and advancements in current sales plans, along with an array of promising U.S. sales-driving initiatives yet to be launched.

Geiger noted that Domino’s 2025 guidance was largely reiterated, including approximately 6% retail sales growth and around 8% operating income growth, excluding the potential 100-200 basis points impact from foreign exchange. The company’s expectations for 2025 include a 3% increase in U.S. same-store sales and a 1-2% rise in international same-store sales. InvestingPro analysis shows the company maintains strong financial health with an overall score of "GOOD," supported by impressive metrics including a 34.24% return on assets and consistent dividend growth of 24.79% over the last twelve months. Additionally, the 2026 guidance for retail sales and operating income growth has been adjusted to align with the 2025 targets, reflecting the impact of Domino’s Pizza Enterprises’ (DPE) closures in 2025.

The focus remains on Domino’s sales initiatives in the U.S. for 2025 and the trajectory of same-store sales, with Geiger highlighting multiple factors that could contribute to achieving at least the 3% full-year target for 2025. The analyst expressed confidence in the potential for share price growth, which is currently valued at approximately 23 times the projected 2026 earnings per share. InvestingPro’s Fair Value analysis suggests the stock is currently trading above its Fair Value, with relatively high EBITDA and revenue valuation multiples. Notable strengths include an 11-year streak of dividend increases and strong profitability metrics. This optimism is based on a series of catalysts expected to strengthen U.S. same-store sales, coupled with the likelihood of accelerated global unit growth over the next few years.

In summary, UBS’s stance on Domino’s Pizza shares reflects a belief in the company’s ability to navigate current challenges and capitalize on future sales initiatives to drive growth. Geiger’s comments underscore the potential for Domino’s to achieve its targeted growth despite near-term uncertainties.

In other recent news, Domino’s Pizza reported its fourth-quarter earnings for 2024, showing mixed results. The company’s revenue came in at $1.44 billion, slightly below the consensus estimate of $1.48 billion, with same-store sales in the U.S. growing by only 0.4%, missing the anticipated 1.1%. Despite these figures, Domino’s achieved an adjusted earnings per share (EPS) of $4.89, narrowly missing the consensus forecast of $4.91. Analysts from BMO Capital Markets raised their price target for Domino’s to $515, maintaining an Outperform rating, citing the company’s ability to capture market share and potential for accelerated growth. Meanwhile, RBC Capital Markets kept an Outperform rating with a $500 price target, noting the company’s stable U.S. guidance and potential benefits from additional aggregator partnerships. Loop Capital adjusted its price target to $555 from $559, maintaining a Buy rating, despite the EPS and U.S. same-store sales not meeting expectations. Bernstein maintained a Market Perform rating with a $440 target, acknowledging Domino’s effective management amid challenges in the quick-service restaurant sector. Benchmark also maintained a Buy rating with a $520 target, highlighting Domino’s market share gains and cost-conscious operations.

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