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Domino's Hosted A Pizza Party With Investors—Here Are The Takeaways

Domino's Hosted A Pizza Party With Investors—Here Are The Takeaways

Domino's Pizza, Inc. (NYSE: DPZ) hosted analysts for an investor day presentation where management discussed its position in the restaurant market and its outlook. Here is a summary of what some of the Street's top analysts said after the event.

The Analysts

  • UBS' Dennis Geiger maintains a Neutral rating on Domino's Pizza with an unchanged $825 price target.
  • BTIG Research's Peter Saleh maintains at Buy, price target lifted from $310 to $335.
  • Wells Fargo's Jon Tower maintains at Market Weight, price target lifted from $230 to $238.
  • Stephens' Will Slabaugh maintains at Overweight, unchanged $310 price target.

The stock closed Friday at $267.46, up 3.3 percent.

UBS: Key Takeaways

The management team said it's looking to become the "dominant number one" global pizza brand, Geiger said in a research report. In terms of financial goals, management maintained its three- to five-year outlook of 3-6 percent U.S. and international same-store sales growth, 6-8 percent global unit growth and 8-12 percent total retail sales growth.

Management also detailed a "fortressing strategy" of building new stores that are in proximity to customers. The analyst said this strategy supports management's objectives of dominating the pizza world through superior delivery time, better economics in that drivers complete more deliveries per hour while also focusing on the carryout business where sales are nearly 100 percent incremental.

Related Link: BTIG Says Wingstop's Stock Has Gone 'Too Far Too Fast'

BTIG: Long-Term Gameplan

Management discussed several long-term next-stage investments, including new supply chain capacity and a next-generation PULSE point-of-sale system, Saleh said. A vision towards the next decade shows management's commitment to remain "front-footed" in its investments to sustain growth for many years to come.

Wells Fargo: No Real Surprises

Domino's' presentation offered analysts "little, if any, real surprises," which in itself should be a little surprising as the company's annual event "served as a check-in" on the long term strategy, according to Tower. Instead, several concerns and questions surrounding Domino's strategy were not properly addresses. Among the multiple financial metrics management did offer most were unchanged from prior guidance updates.

Tower continues to question the likelihood of the company reporting upside to EBITDA expectations in 2019 so any multiple expansion moving forward could prove difficult.

Related Link: Goldman On Restaurants: Buy Texas Roadhouse, Sell Yum, Hold Starbucks

Stephens: Domino's Remains A Favorite Pick

Domino's' stock remains one of Stephens' "favorite names for 2019" as management's past success should have investors confident in its outlook. Specifically, the company's momentum is partly due to a large tech team consisting of more than 500 people, which resulted in lower margin costs for the company and a better experience for the consumer.

Management's continued focus on tech and other supply chain improvements should result in further increases to Dominos' competitive advantage over its peers, the analyst wrote in the note. In fact, the company's large scale is becoming increasingly important as it's difficult if not impossible for "virtually all" of its peers to successfully duplicate.

Photo courtesy of Domino's.

Latest Ratings for DPZ

Oct 2020Stephens & Co.MaintainsOverweight
Oct 2020RBC CapitalMaintainsOutperform
Oct 2020Morgan StanleyMaintainsOverweight

View More Analyst Ratings for DPZ
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