Analyst Eyes Papa John's Comparable Sales Amid Price-Value Concerns, Upgrades Stock To Hold

Stifel analyst Chris O’Cull upgraded the shares of Papa John’s International Inc PZZA from Sell to Hold and lowered the price target from $65 to $60.

The analyst noted near-term expectations are reasonable and decided to move to the sidelines, given the stock’s negative sentiment and recent market volatility.

The analyst added that PZZA is in a challenging competitive position in a tough category.

The checks ran by the analyst indicate that domestic comparable sales were about -1% in the first quarter, as the system struggled to compete in an increasingly value-centric environment.

The analyst is not convinced that additional national media will meaningfully improve comps without a compelling price-value message. 

If the comparable sales are flattish this year, the analyst doubts domestic franchisees will rush to sign long-term leases to open units, even with the franchisor offering aggressive financial incentives.

So, the analyst noted comparable sales will be a critical factor for the stock price in 2024.

The analyst lowered the FY24 EPS estimate to $2.57 from $2.65 to reflect a slower domestic sales ramp during the second quarter.

Price Action: PZZA shares are trading higher by 1.31% at $63.32 on the last check Monday.

Photo by Don Sniegowski via Flickr