Selected stock price target news of the day - July 25, 2023

By Matthew Otto

Dominos Delivers on Q2 Results

Ann Arbor, Michigan-based Domino’s Pizza released its Q2 2023 financial results, showing a strong performance despite some challenges. The company beat Wall Street estimates for quarterly profit, thanks to easing supply chain pressures and lower food costs, including cheese and the recently announced UberEats partnership.

The pizza chain’s supply chain costs fell about 6% to $548.6 million in the three months ending June 18, lifting gross margins to 39.5% compared with 36.3% in the same period the previous year.

Domino’s recently partnered with Uber to enhance their delivery business by allowing customers to place orders on Uber’s food delivery app. This strategic partnership is expected to boost their delivery services and attract new customers. The service is set to be piloted in four U.S. markets in the fall.

The revenue for the quarter stood at $1.02 billion, slightly lower than analysts’ average estimate of $1.07 billion. However, profit per share of $3.08 exceeded the expected $3.05. U.S. same-store sales rose 0.1%, missing estimates of about 0.2% increase.

Domino’s highlighted several key financial indicators for Q2 2023, including global retail sales growth of 5.8% (excluding foreign currency impact), international same-store sales growth of 3.6%, and a net store growth of 197. The diluted EPS increased by 9.2% to $3.08.

In addition, Domino’s declared a $1.21 per share quarterly dividend for shareholders of record as of September 15, 2023, to be paid on September 29, 2023. The company will host its Investor Day on December 7, 2023, at its headquarters in Ann Arbor, Michigan.

Despite revenues decreasing by 3.8% in Q2 2023 as compared to Q2 2022, income from Operations increased by 9.7% primarily due to higher global franchise revenues resulting from retail sales growth. Net Income also increased by 6.7% due to higher income from operations and a decrease in the provision for income taxes.

Wall Street Analysts Agree on the Potential Future Margins

Oppenheimer analyst Brian Bittner maintained an Outperform rating and raised the price target from $400 to $427.
Morgan Stanley analyst Brian Harbour also kept an Overweight rating while increasing the price target from $425 to $440.
Christopher Carril from RBC Capital retained an Outperform rating and raised the price target from $430 to $440.
BMO Capital’s Andrew Strelzik kept an Outperform rating and lifted the price target from $450 to $455.
Stephens & Co. analyst Joshua Long reiterated an Equal-Weight rating and maintained a $365 price target.
Citigroup analyst Jon Tower maintained a Neutral rating and boosted the price target from $405 to $431.
Barclays analyst Jeffrey Bernstein retained an Underweight rating and increased the price target from $270 to $320.
TD Cowen analyst Andrew Charles kept a Market Perform rating and raised the price target from $330 to $420.
Finally, Wedbush’s Nick Setyan maintained an Outperform rating and lifted the price target from $430 to $445.

Analyst Jeff Farmer (GORDON HASKETT) has currently the highest performing score on DMZ with 4/4 (100%) price target fulfillment ratio. His price targets carry on average an $-70.9 (-18.37%) potential downside. Domino’s stock price reaches these price targets on average within 117 days.

F5 Surprises on Earnings, Sees Continued growth

F5 announced its financial results for Q3 of the fiscal year 2023. Despite challenges presented by macroeconomic uncertainty, the company reported a 4% growth in revenue from the same period in 2022, from $674 million to $703 million. This growth is attributed to an 8% increase in global services revenue and a 1% increase in product revenue, with a 5% growth in systems revenue, although software revenue saw a 3% drop.

The company’s GAAP (Generally Accepted Accounting Principles) gross profit was $561 million, a gross margin of 79.8%. This is a slight decrease in gross margin compared to Q3 of 2022, which stood at 80.6%. However, the non-GAAP gross profit was $579 million, representing a non-GAAP gross margin of 82.5%.

Operating profit was $104 million, a GAAP operating margin of 14.7%. This is also a slight decrease from 2022’s Q3 GAAP operating margin of 15.9%. However, the non-GAAP operating profit increased to $233 million from $194 million the previous year, raising the non-GAAP operating margin to 33.2% from 28.8%.

Net income for Q3 2023 was $89 million, or $1.48 per diluted share, a rise from 2022’s Q3 figure of $83 million, or $1.37 per diluted share. Non-GAAP net income for Q3 2023 was $194 million, or $3.21 per diluted share, up from $155 million, or $2.57 per diluted share, in the same period the previous year.

The company’s outlook for Q4 2023 anticipates a revenue in the range of $690 million to $710 million, with non-GAAP earnings in the range of $3.15 to $3.27 per diluted share.

The report exceeded top and bottom-line expectations for the fiscal third quarter, posting adjusted earnings of $3.21 per share on revenue of $703 million, compared to analysts’ expectations of $2.86 in earnings per share and revenue of $699 million.

Wall Street Action

Morgan Stanley analyst Meta Marshall reiterates an Equal-Weight rating and maintains a $165 price target.
RBC Capital analyst Matthew Hedberg maintains a Sector Perform rating and raises the price target from $146 to $173.
Barclays analyst Tim Long maintains an Equal-Weight rating and raises the price target from $140 to $162.
Needham analyst Alex Henderson maintains a Buy rating and raises the price target from $175 to $180.
Keybanc analyst Thomas Blakey maintains an Overweight rating and raises the price target from $179 to $193.
Jefferies analyst George Notter raises F5’s price target to $150.

Analyst Samik Chatterjee (JPMORGAN) has currently the highest performing score on FFIV with 11/14 (78.57%) price target fulfillment ratio. His price targets carry on average an $20.31 (12.50%) potential upside. F5 stock price reaches these price targets on average within 296 days.

Kodiak Discontinues Development of Tarcocimab Tedromer Following Phase 3 Trials’ Results

Kodiak Sciences has announced the topline results from its Phase 3 clinical trials of tarcocimab tedromer, an innovative antibody biopolymer conjugate that was being studied for its potential in treating neovascular age-related macular degeneration (AMD) and diabetic macular edema (DME), two leading causes of blindness in older adults.

The company conducted three Phase 3 trials,which involved 557 treatment-naïve subjects with wet AMD. The trial successfully met its primary endpoint demonstrating non-inferior visual acuity gains for tarcocimab dosed monthly compared to aflibercept dosed every 8 weeks following 3 monthly loading doses. Aflibercept is a current standard treatment for AMD. Additionally, tarcocimab was found to be safe and well tolerated with a low rate of intraocular inflammation.

However, the GLEAM and GLIMMER trials, which involved 917 treatment-naïve subjects with DME, did not meet their primary efficacy endpoints. These identically designed studies were aimed at evaluating the efficacy, durability, and safety of tarcocimab tedromer. Although a significant proportion of patients demonstrated extended treatment intervals with tarcocimab, the studies failed to show non-inferior visual acuity gains for tarcocimab compared to aflibercept. Aflibercept is also a common treatment for DME.

Furthermore, an unexpected increase in the incidence of cataracts, a common eye condition that clouds the lens leading to decreased vision, was observed in the tarcocimab groups of the GLEAM and GLIMMER studies. This unexpected finding was a significant factor contributing to the failure of both studies. In contrast, no such imbalance in cataracts was observed in the DAYLIGHT study.

Following the disappointing results from the GLEAM and GLIMMER trials and the overall evaluation of the drug’s effectiveness, Kodiak has made the decision to discontinue further development of tarcocimab. The decision comes despite the potential tarcocimab had shown in the treatment of AMD and DME.

Major Analyst Firms Downgrade Following Phase 3 Clinical Trials Results

Chardan Capital’s Daniil Gataulin has downgraded Kodiak Sciences from Buy to Neutral.
Barclays analyst Gena Wang maintains an Underweight rating and lowers the price target from $5 to $2.
JP Morgan analyst Anupam Rama downgrades from Neutral to Underweight.
Jefferies analyst Michael Yee downgrades from Buy to Hold, setting a $3 price target.

Analyst Anupam Rama (JPMORGAN) has currently the highest performing score on KOD with 2/4 (50%) price target fulfillment ratio. His price targets carry on average an $7.14 (37.32%) potential upside. Kodiak Sciences stock price reaches these price targets on average within 154 days