Domino’s Pizza lifted at Bernstein as 2024 will be first normal year since 2019

In a note covering US restaurant stocks, analysts at Bernstein upgraded Domino's Pizza (NYSE:) to Market Perform from Underperform, raising the price target to $370 from $330 per share.

Analysts said 2024 will finally be the first “normal” year for restaurants since 2019.

However, they added that the new “normal” 2024 also comes with a very interesting setup. “Restaurants are lapping MSD-HSD pricing, and consumers may have built price resistance,” analysts wrote. “Investors are concerned that the sector could witness heightened promotional environment to attract demand, and that restaurant level margins have peaked.”

On DPZ, analysts stated that despite continued skepticism on the pizza category outlook, they believe the near-term setup for 2024 has turned attractive, and there are no immediate catalysts that could materially pressure DPZ.

“However, we believe that valuation has run ahead of growth expectations and will eventually re-rate downward as the dynamics of a hyper-competitive, mature category (1-2% LT category growth) translates to moderating growth beyond the ST growth catalysts,” explained analysts.