Domino's Pizza ( NYSE: DPZ ) was named one of Bank of America's top 10 U.S. stock ideas for the first quarter.
Analyst Sara Senatore and team think DPZ will show meaningful improvement in Q1 after lapping the peak staffing challenges and trough same-store sales growth from a year ago.
The firm also expects the initiatives introduced in 2022 to improve delivery driver availability to gain further traction in 2023 and boost comparable sales. Easing commodity and moderating freight inflation for the pizza chain operator are also seen as supportive of margins.
On valuation: "Relative to the S&P, DPZ is trading at a 1.4x multiple, slightly above its 5-yr average of 1.3x but in line with its 10-yr average. We expect, however, that estimates will be revised higher as sales accelerate and costs come down."
BofA has a Buy rating on DPZ and price objective of $448.
Shares of DPZ were up 0.46% in premarket trading on Monday to $348.00.
The Seeking Alpha Quant Rating on Domino's Pizza is at Hold.
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Domino's Pizza is a named a top Q1 stock idea by BofA