Domino’s Pizza could gain market share with ‘improved’ chicken wings

Domino’s Pizza Inc. has introduced a chicken wing menu option that BTIG analysts believe could lure diners away from Wingstop Inc.

The 10-piece wing item has new sauces and a price tag, $ 7.99, which analysts say will appeal to value-conscious customers.

Domino DPZ,
It previously had wings on the menu, but, according to Richard Allison, the company’s chief executive who spoke about the new item in Thursday’s earnings call, they needed improvement.

“In our view, the improved product quality coupled with the investment behind advertising to support the launch could allow the brand to participate in this multi-billion dollar category,” wrote BTIG analysts led by Peter Saleh.

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“Additionally, we noted that the aggressive price of 79 cents per wing compared to Wingstop, which is generally north of $ 1 per wing, could create some price pressure across the category.”

BTIG recently went down to neutral since buying at Wingstop WING,
+ 3.05%
on concerns that the company lacked funds for expansion.

BTIG rates the purchase of Domino’s shares with a target price of $ 440.

Domino’s is upgrading its game in the chicken wing category in time to meet increased demand.

“While the innovation announced on the menu is not necessarily new, we point to the robust performance of the chicken category both before and since and since COVID, and believe that ultimately there may be a greater opportunity to test and add add-ons to a product Improved Wing vs. Other ‘New’ Items, ”RBC Capital Markets said in a note.

See:Dizzying Rise in US COVID-19 Cases Slows Restaurant Recovery

RBC rates Domino’s stock’s superior performance with a price target of $ 458, above $ 435.

Domino’s reported earnings and revenues that exceeded expectations, with a 16.1% increase in sales in US stores.

Domino shares closed 1.5% on Thursday and 4% less on Friday. Shares are up 33.3% over the year to date, while the S&P 500 SPX index,
+ 0.28%
It has slipped 0.1% for the period.

Analysts have been bullish on Domino’s and its pizza delivery competitor Papa John’s International Inc. during the pandemic due to its digital ordering, delivery and contactless capabilities.

“From here on, value will be a primary focus, while menu innovation could help maintain superior performance,” UBS wrote in a note.

UBS rates Domino’s neutral shares with a price target of $ 415, above $ 385.

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Stifel analysts believe Domino’s can keep its sales momentum in the same store. Domino’s said it would release additional items in the coming months.

“We think many investors will find the wing offers a bit of a disappointment, but the additional launches in the next one to two months would represent the largest number of product launches Domino’s has had in a single year,” analysts led by Chris O ‘wrote. Cull.

“We are confident that management will leverage the various releases to create new menu messages and awareness, drawing attention to Domino’s perennial value platform.”

Stifel rates Domino’s stock retention and raised its target price to $ 400 from $ 360.