Oppenheimer offered its outlook on several companies in the restaurant sector this morning, weighing them against the continuing uncertainty plaguing the Street. "Among other story-specific themes, we believe our buy ideas possess defensive business models and the characteristics required to win market share, offset margin pressures from higher food costs and achieve earnings targets in a slowing macro environment," the brokerage said in a note. With this, Domino's Pizza, Inc. (DPZ - 25.91) was upgraded to "outperform" from "perform."
However, it appears that the rest of the brokerage bunch is slightly bearish toward the pizza delivery company. Specifically, Zacks tallies one "buy" and four "strong buy" endorsements, compared to six lukewarm "holds," leaving the door open for fresh upgrades.
There even seems to be mounting skepticism toward DPZ among options players. During the past two weeks, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 1.08 puts for every call. This ratio arrives in the 83rd percentile of its annual range, signaling that traders on these exchanges have seldom made bearish bets over bullish at a faster pace during the past two weeks.
DPZ has been a technical standout on the charts, outperforming the broader S&P 500 Index (SPX) by over 17.5% during the past 60 sessions. From a longer-term perspective, the stock has rocketed by 95% over the past year, and has leapt up over 63% in 2011 alone.
Since July 2010, DPZ's 10-week and 20-week moving averages have guided the shares into new-high territory, containing all of the stock's weekly closes. Currently, the shares are down slightly, possibly reacting to the market's widespread downturn. Going forward, additional upgrades, or a continued capitulation by the bears, could give DPZ the push it needs to continue its uptrend.
Recent XIV Action May Bode Well for Bulls
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