Oppenheimer has regained its appetite for Domino's Pizza shares. Analyst Brian Bittner named the Michigan-based pizza chain a top pick and raised his price target to $450. His new target implies an upside of 17.5% over Monday's close. "We view DPZ as an under-appreciated revival story into '24, and elevate the idea into our 'top picks,'" Bittner said in a note to clients Tuesday. Same-store sales have the potential to beat Wall Street consensus next year, he said. This optimism is due in part to a loyalty program relaunch and the start of using UberEats this year as another way to order. Bittner said better-than-expected performance could lead to positive earnings revisions and improved investor sentiment. It can also validate unit growth. His call marks a turn from the past year and a half when the analyst was less bullish. But Bittner tied that past pessimism to a downward revision cycle that he now believes has ended. He also said Domino's can begin reversing the cycle and moving higher in the fourth quarter as the company "enters one of the most promising self-help cycles we've identified in years." Bittner said the stock's performance could be affected by increased competition, higher costs or any negative shocks to consumer behavior. Third-quarter earnings likely won't provide upside after getting reported next month, he said. But the analyst said there's a good event path following earnings that includes Oppenheimer's visit to company headquarters in November and its investor day in December. "Following an updated analysis, we believe EPS estimates have bottomed and identify self-help catalysts for a positive revision cycle set to unfold," he said. "We are attracted to optionality we've identified to Street's financial forecasts in '24 and beyond, particularly given our scenario analysis regarding new SSS drivers." Domino's has gained 10.6% this year, underperforming the broader market. — CNBC's Michael Bloom contributed to this report.
