Domino's Pizza Slices Through Competition As Bullish Analyst Upgrades Stock To Buy

Shares of Domino's Pizza Inc DPZ continued to climb in early trading on Thursday, after adding more than 2% before the bell.

The company is poised to stabilize its delivery sales over the next 12 months and continue growing its carryout sales to “new record levels,” according to Stifel.

The Domino's Pizza Analyst: Chris O'Cull upgraded the rating for Domino's Pizza from a Hold to Buy, while raising the price target from $320 to $350.

The Domino's Pizza Thesis: While investors have been focusing on intensifying competition in food delivery, they may be overlooking the “sizable” opportunity in the carryout segment, O'Cull said in the upgrade note.

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“Stabilizing delivery sales will be a key catalyst for shares,” the analyst said. He added, however, that Domino's has “the marketing prowess to not only go after the existing carryout occasions within the QSR pizza category but also compete for mind share in the broader off-premise QSR industry, which is at least a $200B market.”

“From a stock perspective, we believe investors will focus more on the growth opportunity in the carry-out segment once it becomes clear that the company has reached a base of delivery sales from which it can deliver modest growth again, improving sentiment regarding the domestic sales outlook,” O'Cull further wrote.

DPZ Price Action: Shares of Domino's Pizza had risen by 6.7% to $326.28 at the time of publishing Thursday, according to Benzinga Pro data.

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