Domino’s Pizza Inc. has introduced a chicken wing menu option that BTIG analysts believe can drive diners away from Wingstop Inc.
Analysts say the new sauce and price tag in the 10-piece wing item is $ 7.99, which analysts say will entice price-conscious customers.
There were wings on the menu at first, but, according to Richard Allison, the company’s chief executive, who talked about the new item on Thursday’s earnings call, it needed improvement.
BTIG analysts, led by Peter Saleh, said, “Advanced product quality, in our view, combined with the investment behind advertising to support the rollout, may allow the brand a stake in this multibillion-dollar category. ”
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“In addition, we note that an aggressive price point of 79 cents per wing compared to wingstops that is typically north of $ 1 per wing may result in some pricing pressure across the range.”
BTIG recently downgraded neutral to buy from Wingstop Wing,
On the concern that the company lacked funds for expansion.
BTIG bought Domino’s stock with a $ 440 price target.
Domino’s is ramping up its game in the chicken wing category to meet the demand of the times.
“While the announced menu innovation is not necessarily new, we would point to the strong performance of the chicken category from pre-COVID and beyond, and believe that the improved Wing product may eventually lead to more opportunities for testing and add-ons . Vs. other ‘new’ items, “RBC Capital Markets said in a note.
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RBC rates Domino’s stock outperform with a price target of $ 435 to $ 458.
Domino’s earnings and revenue dashed previous expectations, with US-store sales rising 16.1%.
Domino’s shares closed down 1.5% on Thursday and nearly 4% on Friday. The shares have gained 33.3% for the year while the S&P 500 Index SPX,
0.1% has slipped for the period.
Analysts have been excited about Domino’s and its pizza delivery competitor Papa John’s International Inc. during the epidemic due to its digital ordering, delivery and contactless capabilities.
UBS wrote in a note, “Price will be a major focus from here, while menu innovation can help maintain better performance.” ”
UBS called Domino’s stock neutral with a price target of $ 315 to $ 415.
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Stifel analysts believe that Domino’s can maintain its same-store sales. Domino’s said it would launch additional items in the coming months.
Analysts led by Chris O’Cull said, “We are confident that many investors will be able to reduce this offer slightly, but additional launches in the coming one to two months will represent the largest product launches Domino has ever made.”
“We are confident that management will take advantage of various launches to create new menu messages and awareness, focusing on Domino’s evergreen platform.”
Stifel rated Domino’s stock and raised its price target from $ 360 to $ 400.