After being fairly range-bound and placid for the past eighteen months, shares of Domino's Pizza Inc (NYSE: DPZ) are finally starting to break out to the upside. The current rally has been underway since it bounced off a multi-year low last May, with the most recent stage of it having started just last month. All told they're up 40% since before the summer, with a ton of fresh momentum on the bid set to give them a cracking end to the year. 

Much of this is coming off the back of the company's Investor Day, which was held last week. The bullish updates and outlook from management went down a treat, and there's been no shortage of analysts coming out NYSE: DPZ" target="_blank" rel="noopener">bullish on the stock and its prospects heading into 2024. 

Bullish comments

Oppenheimer, for example, boosted their rating on Domino's stock up to a full Outperform while also upping their price target to $450. From where shares closed on Tuesday, this points to further upside in the region of 15%. Were shares to hit this in the coming weeks, they'd have fully broken through the upper level of resistance, which has proven so tricky in the past.

It was here, around the $420 mark, that the bulls ran out of steam on multiple occasions last year and this year, as well as back in 2020. If Domino's is to have any hope of getting back towards its all-time high from December 2021, it needs a decisive breakthrough. Oppenheimer thinks now is the perfect time for this to happen, based on their bullish assessment of Domino's prospects for growth and market performance.

Their long thesis is underpinned by a projection of substantial sales expansion backed up by several strategic projects. They're also big fans of Domino's international growth trajectory and see this quarter as a key turning point for the company after two years of mediocre results. 

In a similar vein, the team at Cowen also took a bullish stance on Domino's heading into 2024, and have the stock rated as Outperform. They, too, see the turnaround story continuing to gather pace, with a full recovery in store-level cash flows happening by 2025. 

Some caution urged

It should be noted that the commentary hasn't been all super bullish with regard to the stock's immediate prospects, with the likes of Piper Sandler urging at least some caution heading into the holidays. To be fair, analyst Brian Mullan made a point of saying he was impressed with the company's Investor Day and that he remains bullish on the overall strategy, but it's the valuation that has him worried. 

Specifically, he feels that next year's anticipated recovery is already priced into shares and that they're fairly valued right now, hence his Neutral rating. For all that, they're still expecting 2024 to be a good year for the company, with the scheduled go-live with Uber Eats set to unlock a fresh revenue stream for the company. 

It's worth noting that Oppenheimer took the opposite stance, saying they actually consider Domino's valuation to be particularly compelling, especially when its price-to-earnings (P/E) ratio of 27 is compared to others in the fast-food space. McDonald's Co (NYSE: MCD) and The Wendy's Company (NASDAQ: WEN) both command P/E ratios in the 20s, while Papa John's International Inc's (NASDAQ: PZZA) is 30. Chipotle Mexican Grill, Inc. (NYSE: CMG), on the other hand, has a P/E ratio of 55, but that hasn't stopped it from hitting all-time highs for the past couple of weeks. 

With that in mind, we can see that Domino's has a lot going for it. Fundamentally, the key metrics are trending in the right direction, while technically, the bulls are very much in control. For those of our readers considering getting involved, look for a clear break above $420 and at least some consolidation to confirm the breakout. A strong report later this month, with an upside surprise on the headline numbers, would also go a long way to setting 2024 up to be a bumper year.