Domino's Pizza Bull Analyst Sees Multiple Catalysts Driving Stock Above $450 In 2024

Benchmark sees upside for shares of Domino's Pizza Inc DPZ following an "upbeat" investor day last week.

What To Know: Benchmark analyst Todd Brooks upgraded Domino's from a Hold rating to a Buy rating on Monday and set a price target of $455, citing a better appreciation of company-specific same store sales drivers heading into 2024. 

Domino's stands to benefit from a successful revamp of the company's loyalty program and the upcoming nationwide launch on Uber Technologies Inc's UBER Uber Eats platform, the analyst said. 

"DPZ management is once again playing offense after fixing the issues that have plagued the company over the past couple of years," Brooks said in a new note to clients.

The Benchmark analyst highlighted new annual forecasts from management, including 7%-plus growth in global retail sales, operating income growth of 8%-plus, same store sales growth of 3%-plus and 1,100-plus net new units per year. Domino's expects to exceed the 3% target in the U.S. in the near term, driven by the aforementioned loyalty program relaunch and Uber Eats initiative, he said. 

Brooks also applauded the company's presentation of its new approach to its technology platform, which the analyst said is "on par" with industry leaders like Starbucks Corp SBUX and Chipotle Mexican Grill Inc CMG. 

Brooks noted that he arrived at a Buy rating and $455 price target by placing a 20x multiple on the firm's new fiscal year 2025 adjusted EBITDA estimate of $1.05 billion.

"We believe that DPZ has company specific drivers of traffic growth for FY24 and FY25 related to its new loyalty platform and upcoming launches on aggregator platforms which should generate outsized traffic gains relative to the broader industry in a difficult economic environment for consumers," the Benchmark analyst said.

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DPZ Price Action: Domino's shares gained 0.65% Monday, closing at $397.48, according to Benzinga Pro.

Photo: courtesy of Domino's.