Papa John's Reinvents Itself: Analyst Breaks Down Frustrations Outlines Opportunities

Stephens analyst Joshua Long reiterated an Overweight rating on the shares of Papa John's International, Inc. PZZA and a price target of $90.

The analyst revised 3Q23E adjusted EPS estimate from $0.60 to $0.57 and 3Q23E EBITDA from $54.5 million to $53.2 million.

For FY23E, Adjusted EPS estimate was revised from $2.71 to $2.64, and EBITDA estimate from $226.6 million to $223.7 million.

With the COVID-19 induced environment normalizing, the analyst is observing outward signs of the company's efforts to rebuild service, innovation, and execution capabilities in partnership with franchise operators.

There has been some frustration in recent quarters from investors and franchisees as results on a one year basis have been overshadowed by strong multi-year sales trends, said the analyst.

However, the analyst holds a renewed appreciation for the behind the scenes efforts to position the brand to steadily innovate and drive growth going forward.

Papa John's recent appointment of a new CFO and Chief Marketing Officer from outside the company will prove to be meaningful additions over time, added the analyst.

Related: Papa John's Appoints Former Nike Executive As Finance Chief

The analyst observed that the domestic unit growth, which has been softer than expectations in recent quarters, can boost growth through the recent entry of its first SVP of Development.

The analyst said that the company is in the early innings of its international growth efforts, but it has shown some promising early results.

Therefore, the analyst remains favorably biased towards the company's premium positioning and global store development opportunity.

Also Read: Papa John's Clocks ~2% Dip In Q2 Revenues, Boosts Dividend, Sees Macroeconomic Challenges Ahead

Price Action: PZZA shares are trading lower by 1.33% at $76.38 on the last check Thursday.