Papa John's cut at KeyBanc on longer road to recovery

Investing.com -- KeyBanc Capital Markets downgraded Papa John’s International (PZZA) from Overweight to Sector Weight on Thursday, citing a prolonged path to recovery for the pizza chain. 

The downgrade comes after the firm’s participation in the Restaurant Finance & Development Conference in Las Vegas, where discussions with industry executives revealed that Papa John’s recovery in sales and profitability may take longer than expected.

“Following a series of meetings with key stakeholders, we believe the road to a sales and profit recovery in the domestic business could be longer and windier than previously expected,” said KeyBanc.

In its note, KeyBanc analysts highlighted that despite "modest improvement in recent SSS trends," the brand faces a difficult quarter ahead. 

"The 4Q is shaping up to be another difficult period for the brand," the analysts stated, adding that the improvement in same-store sales (SSS) is largely due to broader industry recovery and a $3.5 million advertising push by the company in late October. 

However, this initiative also suggests that "fixing Papa Johns may require additional co-investment," potentially necessitating changes to its “Back to Better 2.0” strategy.

The bank pointed out that this strategy, which had already reduced franchisee contributions to advertising, could require a reversal to generate more support for the brand. 

Moreover, they believe adjustments to supply chain commissions could weigh heavily on Papa John’s financials, further complicating the recovery process.

Despite these challenges, KeyBanc remains optimistic about the company’s new leadership team, which includes former Wendy’s CEO Todd Penegor. 

The firm also sees potential in Papa John’s new loyalty program to drive incremental visits. However, with a current stock valuation of 21x 2025 EPS, well above peers like Wendy’s and Restaurant Brands (NYSE:QSR ), KeyBanc expressed concern about the company’s near-term earnings growth potential.

KeyBanc lowered its 2024 and 2025 earnings-per-share estimates to $2.20 and $2.38, respectively, citing "more conservative sales and margin assumptions."

Source: Investing.com

Последние публикации
Adani shares rise; CFO says publicly listed firms not subject to US indictment
25.11.2024 - 06:00
Asia stocks jump on gains in cyclical sectors, US optimism
25.11.2024 - 06:00
Australia PM plays down privacy fears of social media ban for children
25.11.2024 - 05:00
Adani bonds slide to year low as investors weigh bribery allegations
25.11.2024 - 05:00
Apple’s China suppliers rally as CEO Cook appears in Beijing
25.11.2024 - 05:00
US stock futures rise as Trump picks Bessent for Treasury role
25.11.2024 - 04:00
'Wicked,' 'Gladiator II' bring in $270.2 million in global box office
25.11.2024 - 04:00
Webush upgrades Snowflake, Elastic to Outperform on AI optimism
25.11.2024 - 04:00
Australia’s SG Fleet jumps on $785 mln takeover bid from Pacific Equity Partners
25.11.2024 - 04:00
Trump's FDA pick Makary boosts BioPharma confidence, says BMO
25.11.2024 - 04:00
Air New Zealand sees lower earnings for first half of 2025 as engine issues persist
25.11.2024 - 04:00
US plans to reduce Intel's $8.5 billion federal chips grant below $8 billion - New York Times
25.11.2024 - 04:00
Intel to receive smaller CHIPS Act grant from Washington- NYT
25.11.2024 - 04:00
Chinese EV demand expected to remain strong through 2024 end - HSBC
25.11.2024 - 04:00
ONEOK to buy rest of EnLink for $4.3 bln in stock
25.11.2024 - 04:00

© Analytic DC. All Rights Reserved.

new
Анализ рынка Как повлият завтра отчет NFP на курс доллара США?