Wells Fargo Reiterates Equal Weight Rating on Domino's Pizza (DPZ)

Wells Fargo analyst Zachary Fadem reiterated an Equal Weight rating and $350.00 price target on Domino's Pizza (NASDAQ: DPZ).

The analyst comments "Dicey QSR/Pizza backdrop aside, we expect DPZ US comp to land above Street (vs its hardest compare of the yr) w/ QTD solid via innovation. At 14.5x NTM P/E, risk/reward leans favorable, but low conviction in '27 return to algo keeps us sidelined. See relief potential on Q3 print, but overhangs persist. DPZ shares are -8% since 7/21 (SPX +3%) on choppy checks, elevated promo & mixed Int'l read-thrus. US comps likely started strong (~3ish) before fading in Jul/Aug; but QTD seemingly better on Domino launch, Labor Day shift & Oct boost wk. At trough-ish P/E a Q3 beat should spell relief, yet industry/category pressures persist (GLP1, promo, low-end exposure, gas prices), Nov/Dec compares harder & return to 3% algo a tough early bet for '27. Breaking down the Q3 setup. Buyside expectations are ~1% (aided by full promo cal), w/ trends seemingly softer through Q3 reflecting Best Deal Ever lap & shift to less compelling $5 off next order. We suspect the Domino launch adds +1% to Q4 comps (+2% mix, ~50% incrementality), supporting solid QTD. While promotional intensity remains elevated across QSR ($10 3-topping pizza at PH, $3 items at MCD, etc.), we expect DPZ to stay aggressive as US compares ease 150bps in Q4 and 290bps in Q1. DPZ checks. 1) While FQ3 card spend slowed -120bps q/q, we est comp accel'd +90bps on consistent promos/launches (vs 6/12 weeks LY); Per BBG ALTD, Q4-TD incr +260bps q/q via Domino personal pizza launch; 2) Our Q3/Q4 DPZ commodity basket +30bps/-340bps q/q (w/ cheese/flour -11%/+24% in Q3); a Supply Chain plus; 3) US App DAU decel -16pts m/m in Sep, but share gains within pizza continues; 4) QSR industry traffic data improved Sept-TD w/ -3%/-5%/-3%/-2% Jun/Jul/Aug/Sept-TD, per Placer.ai. Model tidbits. 1) Our +1% U.S. Comp represents a +90bps acceleration vs Q2 and +280bps on a 2-yr basis via mix/price; 2) Our US comp assumes +2.5%/-0.2% Carryout/ Delivery, -0.5%/+1%/+0.5% orders/price/ticket; 3) We esti Int'l comp ex-FX of +1%, or +110bps q/q w/ FX ~neutral to SWS; 4) We model EBIT% +9bps to 19.5% as Supply Chain benefits of +15bps persist but at a diminishing rate (+LSD% commodity basket, procurement productivity, etc.) & G&A +25bps at ~2.3% of SWS; 5) DPC Dash -$2.5M to EBT. Est/PT updates. Our FQ3 EPS of $4.39 is ~inline vs. Consensus, including a -6c mark-to- market DPC Dash impact, offset by above-Street comps (US +1%) & easing commodity inflation (on Supply Chain). We raise FY26/27 EPS +9c/+30c to $19.15/$21.25 on higher 2H comp expectations in light of increased promos and personal pizza launch success. While we raise EPS estimates, our PT of $350 is unchanged (16.5x '27 EPS) considering broader industry headwinds & concern that comps remain sub-algo in '27."

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 $297.27 yesterday.

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