Jefferies Cuts Price Target#
Jefferies has lowered its price target for Domino's Pizza shares (NYSE:DPZ) from $400 to $350 while maintaining a Hold rating. Currently, the stock is trading at $335.06, close to its 52-week low of $328.74, and has seen a significant decline of 30% over the past year.
Weak Sales Performance#
The firm pointed to Domino's first-quarter same-store sales growth of just 0.9%, which fell short of the expected 2.6%. This lower sales performance, combined with a decrease in restaurant-level profit margins, contributed to misses in both EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and earnings per share. However, some improvement was noted in supply chain margins.
Revised Sales Guidance#
Domino's has adjusted its full-year same-store sales guidance to reflect low single-digit growth, indicating challenges due to economic conditions and increased competition. The company has also reduced its international same-store sales guidance to similar low single-digit growth. Additionally, the forecast for operating income growth has been lowered from 8% to mid-to-high single digits.
Broader Market Challenges#
Following these updates, several financial firms have also revised their price targets for Domino's. RBC Capital cut its target to $350, while Barclays lowered theirs to $315, both citing disappointing sales figures. Morgan Stanley and Stifel have also adjusted their targets, highlighting the competitive pressures and soft sales results that Domino's is currently facing. These changes reflect the ongoing challenges in the market for the pizza chain.