6. Papa John’s International, Inc. (NASDAQ:PZZA)
Analyst Upside Potential as of May 29: 18.2%
Dividend Yield as of May 29: 5.47%
On May 15, Stephens maintained its Overweight rating on Papa John’s International, Inc. (NASDAQ:PZZA). It reiterated its $40 price target on the stock following a Reuters report that the company’s largest franchisee has joined Irth Capital’s latest effort to acquire the pizza chain. The firm said the development marks another chapter in the ongoing acquisition story surrounding Papa John’s. According to the analyst, takeover interest has helped support the stock’s valuation despite continued pressure from weak customer traffic, same-store sales challenges, and ongoing repositioning efforts.
The analyst noted that near-term sentiment is likely to remain under pressure due to softer traffic trends and planned menu simplification initiatives. Even so, Stephens remains positive on the company’s longer-term recovery prospects. The firm believes refranchising efforts, supply chain savings, and a leaner cost structure provide a credible path toward margin improvement.
On May 8, Piper Sandler analyst Brian Mullan lowered the firm’s price goal on Papa John’s to $30 from $32. He maintained a Neutral rating following the company’s quarterly results. The firm pointed out that North America’s same-store sales declined 6.4%, coming in below consensus expectations. According to Piper Sandler, the result reflects the difficult operating environment facing the quick-service restaurant industry broadly, and the pizza category in particular. Management also indicated during the earnings call that same-store sales trends in the second quarter have so far been running slightly worse than the 6.4% decline reported in the first quarter. The firm said this compares unfavorably with pre-earnings expectations and is likely to result in downward revisions to consensus same-store sales estimates as the quarter progresses.
Papa John’s International, Inc. (NASDAQ:PZZA) operates and franchises pizza delivery and carryout restaurants under the Papa Johns brand. In certain international markets, the company also operates dine-in and delivery restaurants.
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