Papa John’s stock should not trade at a discount to peers – analyst says

on Sep 4, 2023
  • Wedbush Securities upgrades Papa John's International Inc to "outperform".
  • Analyst Nick Setyan sees same-store sales and margin improvement ahead.
  • Papa John's stock is currently down more than 20% versus its YTD high.

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Papa John’s International Inc (NASDAQ: PZZA) has lost about 10% since late July but Wedbush Securities is convinced that a recovery is very likely moving forward.

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Papa John’s stock has upside to $95

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Analyst Nick Setyan upgraded the pizza company in a recent note to “outperform” and raised his price target to $95 which suggests about a 25% upside from here.

Papa John’s stock is currently trading at a 16% discount to peers that he does not find justified based on:

Our expectation for an improved near-to-medium-term same-store sales growth, the potential for margin expansion, and annualised system sales growth over the medium-to-longer-term.

The Wedbush analyst is convinced that promotional activity and faster service will help boost sales and eventually the stock price in the coming months.

Why else is he bullish on Papa John’s?

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Note that the pizza restaurant chain came in shy of revenue estimates in its latest reported quarter.

Still, Nick Setyan likes Papa John’s stock because customer traffic at least on the weekends has been trending up and because the Nasdaq-listed firm has had successful menu offerings.  

On top of it, he told clients in his research note that the pizza company will likely see better margins moving forward on easing commodity prices, improved efficiency, and a “benign labour environment.”

Wedbush Securities now expects Papa John’s to earn $2.72 a share this year. Its shares currently pay a dividend yield of 2.38% which makes up for an additional reason to have them in your portfolio.


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