Domino's Pizza attracts buy rating from UBS with sales growth still on the menu

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UBS turned constructive on Domino's Pizza (NYSE:DPZ) even with macroeconomic pressures building.

Analyst Dennis Geiger and team thinks valuation on DPZ looks attractive compared to its peers and that demand should hold up even in an uncertain consumer spending environment.

"We view recent DPZ demand weakness concerns as overblown, w/ potential catalysts to accelerate US sales trends, a compelling LT growth profile that should remain largely intact, and an attractive risk/reward."

Crucially, a recent UBS survey indicated that pizza demand is holding up. Geiger also pointed to price increases and initiatives to boost staffing as potential sales catalysts.

All in all, DPZ is said to be positioned as a value leader, with elevated brand loyalty. Global system sales growth of 6% to 10% is anticipated including global unit growth of 6% to 8%.

UBS upgraded Domino's Pizza (DPZ) to Buy from Neutral and assigned a price target of $385.

Shares of DPZ rose 2.71% to $325 in premarket trading on Tuesday vs. the 52-week trading range of $300.63 to $567.57.