Barclays Says Pizza Chain's Tailwinds are Fading

The stock just hit a record high in mid-November

Deputy Editor
Dec 15, 2021 at 10:17 AM
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Barclays downgraded Domino's Pizza, Inc. (NYSE:DPZ) to "underweight" from "equal weight," noting that the tailwinds the pizza chain saw in the wake of the Covid-19 pandemic are now fading. The brokerage firm also cut its price target to $495 from $500. In response, the equity is down 0.8% to trade at $519.40.

Analysts were hesitant on DPZ coming into today, with 14 of the 23 analysts in coverage calling the stock a "hold," compared to eight "buy" or better ratings. This still leaves the security susceptible to more downgrades and/or price target cuts, especially considering the 12-month consensus price target of $526.11 is a slim 1.2% premium to current levels. 

In the options pits, however, calls have been dominant. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DPZ sports a 10-day put/call volume ratio of 1.35 that ranks in the elevated 79th percentile of its annual range, meaning long calls are being picked up at a quicker-than-usual rate. 

Domino's Pizza stock hit an all-time high of $549.51 on Nov. 11, though an early December charge back toward that level was rejected at the $547 area. The 40-day moving average is stepping up to catch today's dip, which coincides with a familiar floor at the $510 mark. Year-to-date, DPZ is up 34.6%.

 

 

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