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Nomura: International Expansion Could Drive Domino's Next Wave Of Growth

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Nomura: International Expansion Could Drive Domino's Next Wave Of Growth
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Domino's Pizza, Inc. (NYSE: DPZ) stock is soaring following an analyst upgrade. The Ann Arbor, Michigan-based pizza chain is benefitting from investments in technology, making it more attractive for international franchisees to buy rival franchises and switch them over to the brand, according to Nomura. 

The Analys

Mark Kalinowski of Nomura upgraded Domino's from Neutral to Buy and maintained a $201 price target.

The Thesis:

After a 21-percent pullback from its five-week highs in late June, Dominos shares are now more attractive, the analyst said. (See Kalinowski's track record here.) 

International expansion provides Domino’s with unit growth without extra corporate commitment of capital, Kalinowski said. 

“As Domino’s continues to grow, we believe that this is placing more competitive pressure on local and regional international pizza chains. These chains simply lack the scale and resources to effectively compete with Domin’s as digital ordering has become increasingly important to customers ordering pizza for delivery." 

The pizza chain offers "meaningfully better unit growth and the likelihood of better same-store sales growth" than competitor YUM! Brands, Inc. (NYSE: YUM), Kalinowski said. Domino’s is expecting worldwide annual unit growth in the 6-8 percent range.

Price Action:

Shares of Domino’s traded up over 6 percent following the upgrade, and were at $183.27 at last check. 

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Latest Ratings for DPZ

DateFirmActionFromTo
Nov 2018UBSDowngradesBuyNeutral
Oct 2018CitigroupMaintainsNeutralNeutral
Oct 2018UBSInitiates Coverage OnNeutral

View More Analyst Ratings for DPZ
View the Latest Analyst Ratings

Posted-In: Mark Kalinowski Nomura PizzaAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

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StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
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