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Domino’s Pizza Q3 Shows Labor Challenges, International Growth

by Mike Robinson

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© Reuters.

Analysts are mixed on Domino’s Pizza’s Q3 report, which boastedStrong growth in international markets, however same store sales declined in the U.S.

Stifel analyst Chris O’Cull pointed to labor shortage challenges both in staffing stores and building new ones, but reminded “that these issues are temporary in nature,” with international strength – boosted by a 8.8% same store sales number – offsetting the concerns. Stifel rate the stock as a Hold with a $485 target price.

Jeffries cut their price target for Domino’s from $522 to $500, citing the big domestic same store sales miss – -1.9% decrease vs. a consensus 1.6% growth – which looks worse on a two-year stack, with a 400bps drop Q/Q.

Oppenheimer analysts, BTIG Morgan Stanley (NYSE:) Deutsche Bank (DE) Wells Fargo (NYSE:), and RBC Capital all lowered their price targets, while Barclay’s raised its DPZ price target. These ratings have not been changed.

Domino’s finished up .25% yesterday, rallying after a rough start due to the same-store-sales miss. It is perceived as a COVID recipient, with the same store sales growth and EPS growth both increasing through 2020 and 2021. Investors will need to know where this growth slows down as it continues its rapid growth and how eat-in sales might change if there are no pandemic fears.

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