Domino's Pizza, Inc. (DPZ) shares fell about 1% during Thursday's session after Stephens downgraded the stock to Equal Weight with a $360 price target and MKM Partners lowered its price target from $445 to $440 per share.

Key Takeaways

  • Domino's Pizza shares moved lower during Thursday's session after Stephens downgraded the stock to Equal Weight with a $360 price target and MKM Partners lowered its price target to $440 per share.
  • The two analysts believe that the vaccine rollout could increase the likelihood of greater mobility and facilitate a return to indoor dining later this year. These dynamics could have a negative effect on delivery-focused companies like Domino's Pizza.
  • The stock remains range bound with a neutral relative strength index (RSI) reading, but if the price moves higher, the stock could see a bullish moving average convergence divergence (MACD) crossover.

Stephens analyst James Rutherford downgraded Domino's stock from Overweight to Equal Weight and lowered the firm's price target from $440 to $360 per share. At the same time, MKM Partners analyst Brett Levy lowered his price target to $440 per share, saying that pizza players could be hampered by optimism from the vaccine rollout that could improve consumer mobility.

Despite these concerns, other analysts remain optimistic and bullish on Domino's Pizza. Evercore ISI initiated coverage on the stock with an Outperform rating and a price target of $460 per share in mid-December, saying that the market is underestimating its market share gains and growth in 2022 and beyond after the COVID-19 pandemic resolves.

Chart showing the share price performance of Domino's Pizza, Inc. (DPZ)
TradingView.com

From a technical standpoint, the stock tested short-term lows before rebounding toward the 200-day moving average at $383.86. The RSI remains neutral with a reading of 44.45, but the MACD could see a bullish crossover if the price moves higher. These indicators suggest that the stock could continue to be range bound to moderately bullish over the coming sessions.

The crossover is a point on the trading chart in which a security's price and a technical indicator line intersect, or when two indicators themselves cross. Crossovers are used to estimate the performance of a financial instrument and to predict coming changes in trend, such as reversals or breakouts.

Traders should watch for a breakout from the 200-day moving average toward trendline resistance at around $400.00 over the coming sessions. A breakout from those levels could lead to a retest of prior highs of around $430.00 over the intermediate term. If the stock breaks down from support, traders could see a move toward reaction lows of around $362.00.

The Bottom Line

Domino's Pizza shares moved lower during Thursday's session after a pair of analysts came out negative on the stock. While the RSI remains in neutral territory, the MACD could see a bullish crossover that portends upside ahead.

The author holds no position in the stocks mentioned except through passively managed index funds.