Melius initiates coverage on Domino's Pizza stock with Hold rating
Investing.com
Published Jul 14, 2025 07:37AM ET
Investing.com - Melius Research initiated coverage on Domino's Pizza (NASDAQ:DPZ) with a Hold rating and a $500 price target on Monday. The stock, currently trading near $464, appears overvalued according to InvestingPro analysis, with a P/E ratio of 26.4x and an EV/EBITDA multiple of 22.3x.
The research firm acknowledged Domino's as a "world-class operator with unmatched scale in pizza delivery and carryout," highlighting the company's strong franchisee alignment and high returns on capital. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 14 consecutive years with a current yield of 1.5%.
Melius noted that Domino's has built an "enduring competitive advantage" through years of digital leadership and supply chain discipline in the competitive pizza market.
Despite these strengths, Melius believes much of Domino's positive attributes are already reflected in the current stock price, limiting potential upside in the near term.
The firm indicated it would consider a more positive stance on the stock given "a better entry point or upside surprises in international growth," adding that recent delivery partnerships and loyalty program refreshes are unlikely to drive significant near-term upside.
In other recent news, Domino's Pizza has been the focus of several analyst reports highlighting various aspects of its business performance and future prospects. Morgan Stanley raised its price target for Domino's to $514, maintaining an Overweight rating, citing positive expectations for same-store sales and the continued ramp-up of its partnership with DoorDash (NASDAQ:DASH). Meanwhile, Loop Capital reiterated its Buy rating with a $564 target, noting that same-store sales growth in the fiscal second quarter exceeded expectations, although early third-quarter performance appeared softer. BMO Capital Markets also maintained its Outperform rating with a $540 price target, expressing confidence in Domino's market share gains and business momentum despite challenging macroeconomic conditions.
On the other hand, Redburn-Atlantic initiated coverage with a Sell rating and a $340 price target, pointing to significant challenges such as weak organic traffic and a shift towards aggregator platforms that may impact profit margins. UBS reiterated its Buy rating with a $540 target, highlighting Domino's potential for increased sales momentum in the U.S. and its strategic initiatives that could boost traffic and sales. These developments reflect a range of perspectives on Domino's Pizza, with analysts considering both the opportunities and challenges facing the company in the current market environment.
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