Nomura Securities Raises price Target on Domino's Pizza (DPZ) Ahead of 3Q Report; Reiterates Neutral

October 17, 2016 8:41 AM EDT
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Price: $166.36 +0.58%

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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."

For an analyst ratings summary and ratings history on Domino's Pizza click here. For more ratings news on Domino's Pizza click here.

Shares of Domino's Pizza closed at $151.12 yesterday.

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