Credit Suisse on Wednesday downgraded shares of Domino's Pizza after the restaurant chain reported disappointing fourth-quarter results. "We see increased risk to numbers from labor challenges, changes to national value platforms & unit growth delays," Credit Suisse's Lauren Silberman said in a note. Credit Suisse changed its rating on Domino's to neutral from outperform. The firm lowered its price target on the stock to $475 from $570. The new projection implies 9.9% upside from Tuesday's close. The call comes after Domino's missed Wall Street estimates on the top and bottom lines. Management on the earnings call attributed the lower-than-expected results to a staffing crunch. "DPZ is facing outsized labor challenges given heightened competitive activity for delivery drivers, & we have limited visibility into the timing of an improvement as dynamics appear to be somewhat structural in nature," Silberman said. Labor issues weighed on sales. Domino's locations with the top 20% of staffing levels reported same-store sales growth of 6%, while those in the bottom 20% of staffing levels saw same-store sales fall 7%, the firm noted. Plus, Domino's is unlikely to address the staffing challenges with third-party delivery platforms, "as it seeks to maintain control of the customer experience & its delivery infrastructure is a competitive advantage," Silberman said. Credit Suisse also shared some concerns about Domino's plan to raise the price of its main delivery deal, as well as delays in location growth. Domino's shares are down 23.4% in 2022. —CNBC's Michael Bloom contributed reporting.
Credit Suisse on Wednesday downgraded shares of Domino's Pizza after the restaurant chain reported disappointing fourth-quarter results.