Domino's Pizza (DPZ) is poised for a strong year, with guidance that is likely beatable as the company continues to execute well on key initiatives to drive solid growth, Morgan Stanley said Tuesday in a report.

Domino's Pizza, which released Q2 results released on Monday, stuck to its guidance for 3% US same-store-sales growth and 12% for international.

"Based on 2Q results we might bias those numbers a bit higher, and international expectations seem to assume potential macro/political headwinds that have not really been present in the 1H," the analysts said.

In Q2, the company reported strong carryout and moderate delivery growth as well as benefiting from the impact from stuffed crust. The stuffed crust met DPZ's elevated expectations, positively impacting checks and traffic, along with strong operational performance, the analysts added.

The analyst said RLM fell 2% points to 15.6%, mainly due to higher insurance expenses; franchisee earnings continue to show an upward trend but keeps RLM unchanged for 2H, but is down 40 bps to 16.2% vs 16.6% Street for the year.

Morgan Stanley expects earnings per share for 2025 to be around $17.69, which is lower than $17.87 prior, but expects 2026 EPS of $19.65, the report said.

Morgan Stanley maintained an overweight rating on the stock and raised its price target to $520 from $514.

Price: 471.02, Change: +8.77, Percent Change: +1.90