Wall Street analysts are lowering their price targets on Domino’s Pizza (DPZ) ahead of its third quarter results, due on October 14. The pizza maker has been struggling to meet expectations as inflation and competition weigh on its performance. Jefferies, Bank of America Securities, and Piper Sandler have all recently lowered their price targets in response to these challenges.
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The Street expects DPZ to report diluted earnings of $3.97 per share on sales of $1.14 billion. The consensus reflects a 5% year-over-year decline in earnings alongside a 5.5% increase in sales compared to the prior year period.
Here’s Why Analysts See Downside in DPZ
Jefferies analyst Alexander Slagle slashed his price target from $490 to $455, implying 12% upside potential from current levels. He has a Hold rating on Domino’s Pizza as he anticipates a softer finish to Q3 for its U.S. restaurants coverage. He believes that demand trends remain choppy, prompting a more cautious outlook on near-term same-store sales growth. Slagle stated that he sees “moderate downside risk” for the third quarter across its restaurants coverage and has lowered price targets for multiple companies within the sector.
Similarly, Piper Sandler analyst Brian Mullan cut the price target from $477 to $443 and kept his Hold rating. The revised target reflects a 9% upside potential from current levels. Mullan noted that Domino’s is expected to report at least in line with the current consensus estimate, with Q3 same-store sales pegged at 4.2%. However, he believes that the demand trends to date in Q4 remain muted compared to the current consensus of 5.1%.
Additionally, Bank of America Securities analyst Sara Senatore reiterated her Buy rating on DPZ stock, but cut the price target from $549 to $514, implying 26.5% upside potential from current levels. Also, analysts at Morgan Stanley and Barclays cut their price targets on DPZ stock, citing similar issues.
Overall, analysts remain concerned about Domino’s growth drivers, recent sales trends, and broader market pressures.
Is DPZ Stock a Good Investment?
On TipRanks, DPZ stock has a Moderate Buy consensus rating based on 11 Buys, seven Holds, and one Sell rating. The average Domino’s Pizza price target of $508.11 implies 25% upside potential from current levels. Year-to-date, DPZ has lost 2%.
