Stifel upgraded Domino’s Pizza (NYSE:DPZ) to Buy from Hold and increased the price target to $350 from $320. The analysts noted that Domino’s Pizza has experienced a decline in delivery sales, reduced franchisee profitability, and slower unit growth, resulting in a reset of the company’s long-term revenue expectations.
After examining the company’s plans and engaging with management, the analyst believes that over the next 12 months, Domino’s Pizza will stabilize delivery sales and achieve new record levels of carryout sales. This improvement in sales, along with lower commodity costs and increased labor productivity, is expected to enhance franchisee profitability and drive further unit growth.
While the analysts don’t anticipate the second-quarter results to demonstrate evidence of stabilizing delivery sales, they expect lower costs to provide some near-term earnings support.