BUZZ - Broker's View: Super value deals attract customers to Domino's, but sales remain sluggish

October 14 - ** Domino’s Pizza (DPZ.O) on Tuesday lowered (link) its full-year sales outlook and warned that as inflationary pressures increase and consumers tighten spending, same-store sales in both the US and international markets will continue to be sluggish

** The median target price given by 32 brokerages covering the stock is $367.50—data compiled by LSEG

Growth in customer traffic offset by smaller order sizes

** BTIG (rating “Buy”, target price: $425) stated that despite weak consumer spending, Domino’s continues to see growth in customer traffic and gain market share, but customers are ordering fewer items per order

** TD Cowen (“Hold”, target price: $320) pointed out that as low-income consumers are budgeting more tightly, the company still finds it difficult to raise the average order value and looks forward to the firm making larger strategic adjustments in a challenging pizza market

** Jefferies (“Hold”, target price: $320) noted that despite continued growth in transaction volume, sales growth remains weak because of reduced order sizes per customer and because management has become more cautious about short-term demand in the US market

** Morningstar said that DPZ’s value-oriented promotional activities are attracting low-income customers and driving traffic growth, but lower spending per transaction is dragging on sales growth and franchisee profitability

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