After 44% Run, Domino's Pizza Hit With A Downgrade On Valuation

Shares of pizza chain Domino's Pizza, Inc. DPZ are up nearly 50 percent since the start of 2018, which brings an end to Maxim Group's bullish stance on the stock.

The Analyst

Analyst Stephen Anderson downgraded Domino's Pizza from Buy to Hold with an unchanged $270 price target.

The Thesis

Domino's Pizza's stock is trading north of Anderson's $270 price target and is up 44 percent since the start of 2018, Anderson said in the downgrade note. The company's accelerated unit development both in the U.S. and internationally, coupled with a favorable cost outlook, is now fully priced into the stock, the analyst said. 

The stock has outperformed the industry average gain of 11 percent this year, Anderson said. The pizza chain is trading near a peak cyclical multiple of 28.2x forward P/E, which is nearly 10 turns higher than its closest restaurant rival, he said. 

The analyst's downgrade is due to valuation concerns, but a premium valuation is still warranted, he said. 

Price Action

Shares of Domino's Pizza's stock were down 2.27 percent at the time of publication Friday. 

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Photo courtesy of Domino's.