Mizuho turns bullish on pizza chains, flags burger brands as laggards
Investing.com — Mizuho set a cautious tone on the restaurant sector as an industry-wide price war squeezes margins, but said pizza quick-service chains and casual dining names are best positioned to outperform.
Restaurants are locked in “a hyper-value environment” as higher post-pandemic menu prices drive consumers toward groceries and convenience stores.
To win back traffic, chains are cutting prices or holding back on price increases, a shift Mizuho said would benefit brands with strong value credentials such as Domino’s Pizza and Wingstop.
Mizuho initiated Domino’s, which is rated outperform and a $500 price target, as a key beneficiary, saying the company absorbed margin pressure early by limiting price growth and is now poised for same-store sales gains and margin expansion.
Wingstop was rated outperform, with a target of $320. The company was described as “the best growth story in restaurants,” with high unit growth and strong systemwide sales visibility.
Among casual diners Mizuho highlighted Texas Roadhouse, Cheesecake Factory, and Brinker International as well-positioned to sustain transaction growth into 2026.
The analysts said casual dining chains now look relatively affordable versus quick-service peers and are gaining share through delivery and meal-replacement options.
Whereas the brokerage warned that burger chains and family diners face declining traffic and weak profitability as value competition intensifies. It rated Wendy’s Underperform with a $8 target and sees it least suited for the current environment given a lack of a clear pricing strategy, a CEO transition, and potential retreat from the breakfast segment.
Fast casual operators such as Chipotle, Cava, and Shake Shack were called “over-earning,” with margins likely to erode as they underprice grocery inflation to win back customers.
Mizuho named Dutch Bros as its top pick across coverage, saying it offers a better value proposition than Starbucks and retains strong unit growth prospects. It is rated Outperform with a $70 price target.
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