Domino's Pizza (DPZ) will likely see macro headwinds and competitive pressure persisting through Q4 and into 2027, UBS said in a note emailed Wednesday.
The company's fiscal Q3 results demonstrated strong US order count growth and continued market share gains in the quick-service restaurant pizza category, but pressured same-store sales and cuts in guidance reflect ongoing headwinds, according to the note.
Order count growth should continue to be solid in Q4, supported by a new menu item called "the Domino," additional value offers, and the company's other plans, UBS analysts said. They expect Domino's to reiterate its guidance of low-single-percent growth for US same-store sales, at the low end of the range.
US store development guidance was reduced to a range of 125 to 150 net openings from 175 previously due to pressure on franchise profitability and interest rate headwinds, the analysts said.
However, the company reiterated its confidence in the long-term opportunity of over 8,500 units, expected to be driven by attractive unit economics and compelling returns, among other factors, according to the note.
UBS' rating on the company's stock is buy, with a price target of $385.
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