Morgan Stanley Boosts Domino's Pizza Price Target By 5% On Strong Long-Term Outlook

Morgan Stanley analyst Brian Harbour reiterated an Overweight rating on the shares of Domino's Pizza Inc DPZ and raised the price target from $435 to $455.

With some variant expectations into DPZ's first investor day in several years, the analyst notes the event delivered on strategic detail, financial goals, and encouraging near-term indicators.

DPZ continues to take share from national competitors, regional brands and independents alike in the U.S., and aims to continue to do so with more than $3 billion in incremental sales targeted in the next 5 years, writes the analyst.

The analyst continues to expect other aggregators to be a part of the sales picture following the 1-year exclusive partnership with Uber Technologies Inc UBER.

New long-term algorithm through 2028 contemplates 7%+ global retail sales (from 4%-8%+ prior) on 3%+ same-store sales both in the U.S. and Internationally and 1,100+ annual net unit growth, notes the analyst.

The new guidance of 8% operating income growth in 2028 will be driven by top-line growth, disciplined investments and moderate margin expansion post-2024, leading to $400 million incremental operating income targeted by 2028, according to the analyst.

Internationally, DPZ sees more than $4 billion incremental sales through FY28, with much of the growth from China and India, targeting more than 18,500 units in 5 years and 40,000 possible long term, writes the analyst.

The analyst opines that tech advancements can be an unlock on both the customer and store operations front. The analyst says greater automation and AI applications are well suited to pizza and DPZ is in a good position to capitalize on those.

Related: Baking Tech Into Pizza: Domino's And Microsoft Cook Up An AI-Driven Future For Store Operations

Price Action: DPZ shares are trading lower by 1.94% at $394.22 on the last check Friday.

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