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Monday, Benchmark analysts adjusted their outlook on Papa John’s (NASDAQ:PZZA) shares, reducing the price target to $50 from the previous $65 while still maintaining a Buy rating. Currently trading at $30.31, near its 52-week low of $30.20, the stock has declined over 41% in the past six months. The revision comes as a response to the recent changes in the company’s reporting structure and a cautious stance on near-term sales projections.According to InvestingPro analysis, technical indicators suggest the stock is in oversold territory, with multiple additional technical insights available for subscribers.
The analysts, led by Todd Brooks, cited the need for adjustments following Papa John’s adoption of a new segment reporting structure with its fourth-quarter 2024 results. The company’s revenue declined by 3.57% in the last twelve months, with total revenue reaching $2.06 billion. In addition, Benchmark has adopted a more conservative view of Papa John’s Domestic Systemwide Same-Store Sales (SSS) for both the first and second quarters of 2025. This caution is based on an analysis of Placer AI traffic data, which indicates ongoing challenges in near-term SSS trends.
The decision to revise the price target also reflects the current market environment and investor focus on short-term operating results. Investors are seemingly more concerned with immediate performance rather than the potential benefits of management’s strategic brand enhancement and operational improvement initiatives that are expected to yield better results in the second half of 2025.
Benchmark’s new price target is based on a multiple of 10 times their forward Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (AEBITDA) estimate of $230.5 million for Papa John’s. This multiple is a reduction from their previous valuation approach, indicating a shift in expectations for the pizza chain’s stock performance.
Despite the lowered price target, Benchmark maintains its Buy rating on Papa John’s stock, suggesting that the firm still sees value in the company’s shares even as it tempers expectations for the immediate future. The revised target reflects a mix of caution due to recent sales data and recognition of the company’s ongoing strategic efforts.
In other recent news, Papa John’s International, Inc. reported several developments that may interest investors. Moody’s Ratings downgraded Papa John’s senior unsecured notes to B2 from B1, while affirming its Ba3 corporate family rating. The downgrade was attributed to the increase in secured debt following the extension of a $600 million revolving credit facility and a new $200 million senior secured term loan. Similarly, S&P Global Ratings lowered its rating on Papa John’s senior unsecured notes to ’B+’ from ’BB-’, reflecting increased secured debt. In a strategic move, Papa John’s has partnered with Google (NASDAQ:GOOGL) Cloud to enhance its AI-driven services, aiming to optimize delivery and personalize customer experiences. On the financial front, Stifel analysts have adjusted their price target for Papa John’s shares to $40 from $45, maintaining a Hold rating. They noted challenges such as soft domestic system sales and potential profitability issues due to commissary inefficiencies and price increases. These recent changes highlight the evolving landscape for Papa John’s as it navigates financial and operational strategies.
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