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Domino’s Shares Hit Record High as Q2 Earnings Beat Forecasts; Target Price $673

Domino’s shares hit a fresh record high after the world’s largest pizza company reported better-than-expected earnings and revenue in the second quarter, largely driven by international and U.S. same-store sales growth and increases in global store counts during the trailing four quarters.

The largest pizza chain in the world said its earnings per share (EPS) rose to $3.12, up from $2.99 seen in the same period a year ago. That was higher than the Wall Street consensus estimates of $2.86 per share.

The company said its revenues increased $112.4 million, or 12.2%, in the second quarter of 2021. That was above the market expectations of $972.3 million.

Following upbeat results, Domino’s shares hit a new all-time high, jumping 14.55% to $538.82 on Thursday. The stock has surged over 40% so far this year.

Analyst Comments

“A top-line beat lapping Covid benefits with positive US sales assuaged lingering concerns on comp outlook with carryout coming back but delivery also holding up amid a favorable consumer backdrop and strong relative value prop. Estimates rise here with confidence in 2H; price target to $564,” noted John Glass, equity analyst at Morgan Stanley.

“Delivery momentum supporting best in class system sales and unit growth in a still fragmented category; advantaged category with Covid-19 disruption and beginning to lap strong year-ago performance. Well-positioned in key US market: Technology leadership, data-driven investment and marketing decisions are hallmarks of the brand. Carryout market represents incremental growth. Sustainable competitive advantages vs aggregators on value, delivery speed which could become more visible in ’21-’22. Strong cash flow generation, stable franchise income stream and international business are partially offset by a price competitive category & high leverage.”

Domino’s Stock Price Forecast

Twenty analysts who offered stock ratings for Domino’s in the last three months forecast the average price in 12 months of $495.16 with a high forecast of $585.00 and a low forecast of $410.00.

The average price target represents a -8.10% change from the last price of $538.82. From those 20 analysts, ten rated “Buy”, 10 rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $564 with a high of $673 under a bull scenario and $389 under the worst-case scenario. The firm gave an “Overweight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. CFRA raised the target price by $75 to $550. Stephens lifted the target price to $540 from $490. Wedbush upped the target price to $585 from $520. Stifel increased the target price to $485 from $435.

“Adj. EPS $3.12 above Cons $2.88 on better-than-expected dom and int’l SSS and slight Op margin upside. Unit growth also ahead of expectations led by international. SSS momentum holding strong despite easing restrictions and tough compares, which lead us to raise our NT ests. price target to $522 (from $420) and reiterate Hold rating as stock’s current valuation of 27x 2022E EBITDA appears fair,” noted Alexander Slagle, equity analyst at Jefferies.

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