- Stephens & Co analyst Joshua Long reiterated an Equal-Weight rating on the shares of Domino's Pizza, Inc. DPZ with a price target of $300.
- The analyst's recent checks suggest Domino's sales trends in the 1Q23 period were supported by a successful Boost Week and a better-than-expected initial launch of the Loaded Tots platform.
- The analyst noted that Domino's is the leader within the U.S. pizza industry and is estimated to be responsible for the delivery of approximately one-third of all pizzas in the U.S.
- This leadership position is further reflected by approximately ~60% of Domino's domestic sales being generated through the delivery channel.
- In FY22, Domino's delivery sales were nearly $500+ million higher than pre-pandemic levels but down (6.6%) on a comparable sales basis relative to the prior year.
- The analyst specified that the negative comp reflects the mounting challenges of the broader macroeconomic environment on the company's relatively more price-conscious consumer, along with ongoing normalization of sales trends by channel.
- Using the company's corporate stores as a benchmark, the analyst is encouraged to hear that staffing has improved across all positions.
- The analyst noted that Domino's carryout business in the U.S. accounts for about 40% of sales and can serve as a highly incremental channel to supplement the company's core delivery business, over time.
- Despite recent food and labor inflation headwinds, the analyst believes the unit-level economics of Domino's business remain compelling.
- Although Equal-Weight rated on DPZ shares, the analyst maintains a favorable bias toward the long-term potential of Domino's brand given its leadership within the category, organizational size & scale, and brand loyalty among consumers.
- Price Action: DPZ shares are trading lower by 0.03% at $315.32 on the last check Friday.
- Photo Via Company
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