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Why Analysts Suggest a ‘Hold’ for Domino’s Pizza

Rajiv  Nanjapla - Author
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Aug. 18 2020, Updated 5:17 a.m. ET

Analyst recommendations

As of April 28, 2016, Domino’s Pizza (DPZ) was trading at $120.5. The share price might have already priced in the estimates that we discussed earlier in this series. In this part, we’ll look at analysts’ recommendations and estimated price targets for Domino’s Pizza over the next 12 months.

The share price of Domino’s Pizza, which declined by 9.9% after the announcement of 1Q16 results, is expected to reach $134.6 in the next 12 months. The target share price represents a return potential of 11.7% from current prices of $120.5. Earlier, analysts had estimated Domino’s share price to reach $135.6. The lowering of the price target could be due to weak 1Q16 results and reduced earnings estimates for the next four quarters.

On the higher side, John Staszak of Argus Research has estimated the share price of Domino’s Pizza to reach $155 over the next 12 months. While on the lower side, Jeffrey Bernstein of Barclays has forecasted the price to reach $121.

The 12-month target prices for Domino’s peers are as follows:

  • YUM! Brands (YUM): $86.4 with return potential of 7.4%
  • Starbucks (SBUX): $68.1 with return potential of 20.8%
  • Papa John’s (PZZA): $67.6 with return potential of 19.7%
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Analyst ratings

According to a Bloomberg survey of 17 analysts, 29.4% recommend a “buy,” 64.7% recommend a “hold,” and 5.9% recommend a “sell.” As analysts raise their target prices for the next 12 months, the price of the stock could also increase and vice versa. Domino’s Pizza forms 0.46% of the SPDR S&P MIDCAP 400 ETF (MDY).

A share price that’s lower than the target price doesn’t mean you should automatically buy a stock. Before investing, you should carefully analyze the various metrics we covered in this series.

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