JPMorgan has moved Domino's Pizza to an Overweight rating from Neutral and assigned a $450 price target, arguing that the company's steady expansion and the durability of its franchise model warrant buying the shares near current prices. The stock traded up 0.5% at $402 in premarket trading on Tuesday.
The bank pointed to consistent core market growth in the United States as evidence of Domino's momentum. Over the past three years combined, the chain closed only 23 of its 7,186 U.S. units, and management is forecasting 172 net openings in fiscal 2025. JPMorgan noted that this implies approximately 2.4% U.S. unit growth for that year and suggested the company can maintain that pace as it targets a larger total addressable market.
JPMorgan characterized Domino's as having a franchise-heavy structure that is inherently low cost. The firm highlighted that carryout sales make up roughly 44% of the business and that a fast-to-home delivery network underpins the company's operating model. Those features, the brokerage said, support the case for buying the shares around current levels.
The bank advised investors to set aside concerns about tougher year-over-year comparisons tied to recent company initiatives. JPMorgan cited several specific launches and promotions that could complicate near-term comps, including:
- the nationwide introduction of stuffed crust pizza in March 2025,
- a $9.99 unlimited toppings promotion in February 2025, and
- the addition of DoorDash as a delivery partner in May 2025 to match a previous integration with Uber Eats in late 2023.
In its note, JPMorgan said it is changing its valuation approach for global quick service restaurant franchisors. The bank is moving away from a framework that treated McDonald's, Yum Brands, Domino's and Restaurant Brands International similarly on free cash flow yields. Instead, JPMorgan now expects greater dispersion in valuations as business models and reinvestment cycles differ across these companies.
JPMorgan also suggested that continued focus on promotions and expanded chicken menu offerings should help Domino's manage comparisons to prior periods. Internationally, the bank pointed to China and India as primary drivers of unit growth and operating income expansion. Together, those two markets account for about 75% of the company's unit growth and roughly 25% of operating income growth, offering clear paths for further expansion.
The brokerage noted that capital spending has been guided through fiscal 2027 and described the brand's combination of resilience and global reach as attractive at current share levels. JPMorgan added that Domino's has taken relative market share over the past decade, contrasting that performance with peers such as Wendy's and Burger King, which the firm said have lost share and face larger reinvestment requirements.
Conclusion - JPMorgan's upgrade and $450 target rest on a view that Domino's steady unit expansion, low-cost franchise model and international growth opportunity justify a higher valuation despite promotional-related comps in the near term.