On Friday, Jim Cramer of CNBC explained why Domino’s Pizza stock rose from $298 to $331 this week, with a 6.5% gain on Thursday alone. Domino’s has been struggling with a post-Covid hangover, Cramer said, plummeting to its lowest levels since the pandemic last month. Apart from the general hype about restaurant chains after Cava’s successful IPO, Cramer believes Domino’s success is largely due to bullish reports released by Piper Sandler and Stifel this week. “I think this pair of positive Domino’s notes, especially the upgrade from Stifel yesterday, has shaken investors out of their malaise toward this name and made them take a fresh look at the stock, which many of them had given up on a year ago after some poor performance,″ Cramer said.
The analyst at Piper Sandler, Brian Mullen, published his report after the market closed on Tuesday. First, he expressed concerns that the pizza chain was suffering since customers could order easy delivery from its mom-and-pop competitors using third-party applications such as DoorDash. However, Mullen concluded that these issues plague the pizza industry as a whole and that Domino’s, in fact, is one of the strongest players in the field, maintaining a solid customer base while abstaining from third-party services. The analyst at Stifel, Chris O’Cull, upgraded Domino’s from hold to buy, arguing the company will “stabilize delivery sales and continue growing carryout sales to new record levels.” O’Cull also argued that better sales, lower commodity costs and higher labor productivity will boost profitability. Cramer is a longtime proponent of the pizza franchise, and he believes Domino’s sales can significantly improve if it is able to leverage its digital-ordering platform, which accounts for 80% of its sales. “While the next earnings report likely won’t be anything special — in other words, don’t buy it for the next quarter— after these two terrific notes, I’m feeling like Domino’s stock must be bottoming, right?” Cramer said. “Leave some room to buy more if it gets hit after the next earnings report, though, because it probably will not be that good a quarter.”