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Domino’s Stock Rises after J.P. Morgan’s Upgrade

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The upgrade

Today, J.P. Morgan upgraded Domino’s Pizza (DPZ) from “neutral” to “overweight” while keeping its 12-month price target at $270. Of the 22 analysts who cover Domino’s Pizza, 68.2% have given the stock a “buy” rating while the remaining 31.8% have given the stock a “hold” rating. None of the analysts favor a “sell” rating. On average, analysts have set a price target of $289.70, which represents an upside potential of 19.0% from the stock price yesterday.

After Domino’s posted its fourth-quarter earnings on February 21, Morgan Stanley lowered its price target from $270 to $268 while Cowen and Company raised its price target from $290 to $295.

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Peer comparisons

Of the seven analysts who follow Papa John’s (PZZA), 57.1% have given the stock a “buy” rating while 28.6% recommended a “hold” and 14.3% recommended a “sell.” On average, analysts have a 12-month price target of $50.0 with a return potential of 5.6% from yesterday’s closing price of 47.34.

Of the 22 analysts who cover Yum! Brands (YUM), 36.4% have given the stock a “buy” rating while 59.1% favor a “hold” and 4.5% have given the stock a “sell” rating. On average, analysts have a 12-month price target of $97.65, which implies a fall of 2.6% from its stock price of $100.24.

Stock performance

The stock’s upgrade by J. P. Morgan appears to have increased investors’ confidence, raising Domino’s stock price. Today, at 2:39 PM ET, Domino’s Pizza was trading 2.4% higher. However, the pizza company’s stock price has fallen 1.8% year-to-date as of March 18. Meanwhile, peers Papa John’s and Yum! Brands have returned 18.9% and 9.1%, respectively. Also, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 8.3% of its holdings in restaurant and travel companies, has returned 12.8%.

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