Price Target Reduction#
Morgan Stanley has reduced its price target for Domino’s Pizza shares (NYSE:DPZ) from $430 to $395 while maintaining an Equalweight rating. Currently, the shares are trading at $335, which is a 30% decline over the past year and close to their 52-week low of $328.74.
Challenges in Q1#
Analyst Brian Harbour pointed out that Domino’s faced a tough first quarter, grappling with increased competition in the pizza delivery market. Despite its historical position as a leader in this sector, it remains uncertain whether this will lead to positive revisions in earnings estimates soon.
Valuation Insights#
Morgan Stanley noted that while the stock appears undervalued based on its price-to-earnings (P/E) ratio of 18.99, simply having a low valuation does not guarantee a rise in stock price. The firm emphasized that valuation alone is not enough to act as a catalyst for the stock’s performance.
Recent Earnings Report#
In its first-quarter earnings report for 2026, Domino’s posted earnings per share (EPS) of $4.13, falling short of the expected $4.28. The company also reported revenue of $1.15 billion, which was below the anticipated $1.17 billion. Additionally, U.S. same-store sales growth was only 0.9%, missing prior guidance for a stronger first half of 2026. International same-store sales also underperformed expectations.
Adjustments by Other Firms#
Following the disappointing results, several financial firms adjusted their price targets for Domino’s. RBC Capital lowered its target from $400 to $350, while Barclays cut its target from $370 to $315. Stifel adjusted its target to $400 from $485, and BTIG reduced its target to $450 from $500. These changes reflect concerns regarding the company’s weaker sales performance in both domestic and international markets.