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Analysts Give Domino’s Pizza a ‘Buy’ before Q3 2018 Earnings

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Oct. 12 2018, Updated 6:31 a.m. ET

Analyst recommendations

Of the 23 analysts covering Domino’s Pizza (DPZ), 57.1% are favoring a “buy” as of October 10, and 42.9% are favoring a “hold.” Analysts have set an average price target of $296.42, which represents an upside potential of 7.8% from its stock price of $274.92.

Since the announcement of Domino’s second-quarter earnings on July 19, many analysts have raised their price targets. On September 11, Goldman Sachs raised it from $300 to $334. On August 8, Citigroup increased it from $281 to $298.

On July 20, Jefferies raised its price target from $255 to $265. Barclays increased its price target from $241 to $262, and Bernstein increased it from $269 to $281.

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Peer comparisons

Of the seven analysts following Papa John’s (PZZA), 42.9% have recommended a “buy,” and 57.1% have recommended a “hold.” Analysts’ average price target is $55.33 with a return potential of 0.8%.

Of the 24 analysts following Yum! Brands (YUM), 50% have recommended a “buy,” and the remaining 50% have recommended a “hold.” Analysts have set an average price target of $90.22 for YUM with a return potential of 1.2%.

Valuation multiple

The surge in Domino’s stock since the beginning of 2018 has raised its valuation multiple. As of October 10, Domino’s is trading at a forward PE multiple of 29.8x compared to 27.3x at the beginning of 2018. That same day, its peers Papa John’s and Yum! Brands were trading at forward PE multiples of 34.0x and 23.9x, respectively.

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