The lowered near-term expectations for Domino’s Pizza Inc (NYSE:DPZ) have made the risk/reward attractive, according to BMO Capital Markets.
The Domino’s Pizza Analyst: Andrew Strelzik upgraded the rating for Domino’s Pizza to Outperform while keeping the price target unchanged at $430.
The Domino’s Pizza Thesis: A proprietary survey indicated positive trends for the pizza category, and for Domino’s Pizza, in particular, indicating that the current concerns are “overblown,” Strelzik said in the upgrade note.
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The survey suggested “a net increase in pizza category spending over the next six months, with the strongest net increase expected at DPZ,” the analyst mentioned. “The idea that consumers may have pizza fatigue seems unlikely,” he added.
Third-party delivery competition is likely to plateau, Strelzik wrote. “We interpret survey responses to mean consumers do not appear to contemplate meaningful trade-down, which likely would be an incremental benefit to DPZ,” he added.
DPZ Price Action: Shares of Domino’s Pizza had risen by 2.97% to $329.64 at the time of publication Friday.
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