UBS upgrades Domino's Pizza, says demand slowdown concerns are overblown
It's time for investors to take a slice out of the Domino's Pizza pie despite concerns of slowing demand for the pizza maker, according to UBS. Analyst Dennis Geiger upgraded shares of the fast food stock to buy from neutral, saying in a note to clients that the valuation looks attractive compared to its peers and that demand should hold up even in an uncertain consumer spending environment. "We view recent DPZ demand weakness concerns as overblown, w/ potential catalysts to accelerate US sales trends, a compelling LT growth profile that should remain largely intact, and an attractive risk/reward," he wrote. Geiger highlighted recent survey work from UBS that suggests continued resilient demand for pizza. He expects price increases and campaigns to improve staffing shortages to serve as potential catalysts for sales in the near future. "DPZ is positioned as a value leader, with elevated brand loyalty, which should support above avg. resiliency and contribute to strong global system sales growth of ~6-10%, including ~6-8% global unit growth," he said. UBS trimmed its price target by roughly 10% to $385 from $430 a share to reflect higher rates. Still, the fresh target implies a near 22% potential upside for the stock from Monday's close. Shares of the pizza restaurant have come under pressure this year as the market sold off, cratering by about 44%. The stock rose 2.7% in the premarket. — CNBC's Michael Bloom contributed reporting