Shares of Domino’s fell nearly 15 percent since Longbow downgraded the stock last month. At the time, the downgrade was driven by concerns that investors were too bullish heading into earnings.
Domino’s ended up crushing second-quarter earnings estimates this week, where the company saw comps at co-owned stores rise 11.2 percent.
“As stated in our downgrade piece in June, we remained very positive at the time on the short and long-term fundamentals for Domino’s and recommended investors remain opportunistic in the event of a material pullback in the shares,” said Longbow research analyst Alton Stump.
“This pullback since arrived and has created an attractive entry point in our opinion given short and especially long-term top and bottom-line upside available from DPZ’s model.”
Stump stated that the impressive sequential comp growth has given his firm renewed confidence the company has potential to return to high-teen/low 20 percent two-year stacked growth domestically over the next 12–18 months.
Domino’s Improvement and in mobile technology has been the greatest driver of share gains for the company domestically over the last 36 months.
“We expect both major pizza QSR players to continue to gain share over smaller domestic regional chains and independents.”
Latest Ratings for DPZ
|Jul 2017||Longbow Research||Upgrades||Neutral||Buy|
|Jul 2017||Stephens & Co.||Upgrades||Equal-Weight||Overweight|
|Jun 2017||Longbow Research|