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Domino's, Barclays in $1 Billion Accelerated Stock-Buyback Accord

Domino's Pizza says it will pay Barclays $1 billion cash for about two million shares in an accelerated share buyback.

Domino's Pizza  (DPZ) - Get Domino's Pizza Inc Report said Monday that it had entered into a $1 billon accelerated-share-repurchase agreement with Barclays.

Shares of the Ann Arbor, Mich., chain at last check were up nearly 1% to $426.03. 

Domino's said in a regulatory filing that under the terms, it would pay the bank $1 billion cash for about two million shares. 

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The agreement is expected to close in the third quarter, although the settlement may be accelerated at the bank’s option.

Last week, Domino's missed Wall Street's first-quarter-revenue expectations. 

Revenue registered $983.7 million in the quarter, up from $873.1 million a year earlier but short of FactSet's analyst-consensus call for $985 million.

On Friday, several analysts raised their price targets on Domino shares. 

Stephens analyst James Rutherford raised his target to $405 from $360 while affirming an equal-weight rating on the shares, TheFly reported. 

The move came after the company's first-growth global retail sales grew 14% on a constant-currency basis, beating his expectations. 

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Rutherford said that he viewed Domino's shares as reasonably valued, but he preferred to remain on the sidelines to see how summer sales trends evolve.

RBC Capital analyst Christopher Carril boosted his price target to $466 from $446 while keeping an outperform rating, TheFly reported. 

He said the company delivered a "solid" top-line beat thanks to the contribution from both domestic and international businesses.

Domestic comparisons are set to become significantly more challenging in the second and third quarters, Carril said.

Credit Suisse analyst Lauren Silberman raised her price target to $460 from $425, while affirming an outperform rating. 

Silberman said she expected sentiment on the pizza segment to remain negative in the near term. 

However, the analyst said she believed long-term investors continued to like the story. Domino's is viewed as a high-quality growth company with a deep management bench, strong returns, unwavering strategy, technological prowess, and favorable relationships with a healthy franchisee base. Founder Jim Cramer interviewed Domino's Chief Executive Rich Allen last Thursday during the Executive Decision segment of "Mad Money."

Allison said he's excited not only for the increase in same-store sales but also for the rebound in store reopenings after so many Domino's locations were closed due to the pandemic.

Domino's in February missed fourth-quarter-earnings estimates.