Nomura Securities Raises price Target on Domino's Pizza (DPZ) Ahead of 3Q Report; Reiterates Neutral
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Nomura Securities reiterated a Neutral rating on Domino's Pizza (NYSE: DPZ), and raised the price target to $148.00 (from $145.00), ahead of the company's 3Q earnings report. Domino's appears to be taking share from Pizza Hut, as well as regional chains and independents. This drives Q3 EPS estimates up by +$0.05, to $0.90, one cent above consensus.
Analyst Mark Kalinowski commented, "We raise our third-quarter U.S. blended (company-owned and franchised combined) same-store sales forecast for Domino's (DPZ US; Neutral) by 280bp, to +10.0% (Consensus Metrix is at +8.8%), ahead of the company's quarterly earnings release scheduled for tomorrow. We believe that continued woes by Pizza Hut U.S.—which has already reported that its third-quarter same-store sales declined by -2%—are largely Domino's gain, although Domino's certainly appears to be taking share from regional chains and independents as well. Our raised Q3 U.S. blended same-store sales forecast for Domino's drives up our Q3 EPS estimate by +$0.05, to $0.90, placing us one cent above consensus. Given this enviable domestic same-store sales momentum, we also raise our Q4 U.S. blended same-store sales forecast by 100bp, to +7.5%, and our Q4 EPS estimate by $0.02, to $1.38. Our full-year 2016E EPS projection increases by $0.07, to $4.16. And, given this higher anticipated base of earnings coming off of this year, we take up our full-year 2017E EPS estimate by $0.11, to $4.95. Our target price rises to $148, based on an unchanged target multiple of 17.5x our 2017E EBITDA forecast. We maintain our Neutral rating on DPZ."
Shares of Domino's Pizza closed at $151.12 yesterday.
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