Domino's Pizza Inc (NYSE:DPZ) is expected to report weaker-than-expected US same-store sales for the second quarter as macroeconomic pressures, elevated promotional activity across the pizza category and tougher year-over-year comparisons weigh on performance, according to UBS.
Ahead of the company's July 20 earnings report, the brokerage wrote that investors are likely to focus on current and planned sales initiatives, as well as management's outlook for sales in the second half of the year.
UBS forecasts US same-store sales will decline 1.5% in the second quarter, compared with Wall Street consensus expectations for 0.3% growth. The analysts wrote that softer consumer spending and heightened promotional competition are likely to offset benefits from value offers, marketing investments, the company's loyalty program and third-party delivery partnerships.
The firm expects management to highlight initiatives aimed at improving sales momentum, including continued value promotions, further growth through DoorDash, enhancements to Domino's app and loyalty platform, increased marketing and new menu offerings.
UBS also expects the company to discuss product innovation, including new sauces, expanded chicken options and additional crust platforms following the launch of Parmesan Stuffed Crust. The analysts added that store closures among competitors could help Domino's expand its market share over time.
While UBS continues to view Domino's as well-positioned for longer-term market share gains and global expansion, it sees risks to the company's current 2026 guidance.
UBS wrote that it sees downside risk to the company's current 2026 guidance, including low-single-digit growth in US and international same-store sales and mid- to high-single-digit operating income growth, excluding foreign exchange effects and the benefit of a 53rd week.
Outside the US, UBS forecasts global net store growth of 4.6% in the second quarter, in line with consensus estimates, including 31 net new stores in the US and 165 internationally. The analysts noted that global expansion outside Domino's Pizza Enterprises remains a relative strength, supported by attractive franchise economics, strong franchisee profitability, competitor closures and contributions from key international markets.
UBS added that investors are also likely to focus on Domino's Pizza Enterprises, including the arrival of its new chief executive in August, management's confidence in its turnaround strategy and potential portfolio changes to improve performance.
The firm maintained its $375 price target, saying Domino's valuation appears near a support level despite ongoing macroeconomic uncertainty, with longer-term upside supported by the company's potential to gain market share and accelerate sales growth through its strategic initiatives.
Shares of Domino’s traded hands at $305 on Wednesday afternoon.