We cut our 12-month target price to $370 from $445, 23.6x our 2024 EPS estimate, a discount to DPZ’s five-year average forward P/E of 30.3x, justified by continued softness in top-line growth. We raise our 2023 EPS estimate to $14.41 from $13.48 and 2024’s to $15.69 from $15.30. DPZ posted Q3 EPS of $4.18 (+49.8% Y/Y), $0.88 above consensus. Revenue of $1,027M (-3.9% Y/Y), was $21M below consensus. Operating income grew 7.4% Y/Y to $189M, in line with consensus, and the margin widened 190 bps Y/Y to 18.4%. DPZ’s same store sales fell 0.6% in the U.S., but grew 3.3% (ex-FX) internationally. DPZ noted continued food basket cost deflation, buoyed by the adoption and usage of its revamped loyalty program. While we’re encouraged by DPZ’s recent initiatives, including partnerships with Uber Eats and Microsoft, the magnitude and trajectory of the benefits remain uncertain. In addition, rising labor costs remain a drag on DPZ’s profit margin, while the positive impact of lower food costs is expected to fade.