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On Monday, Stephens analyst Jim Salera adjusted the price target for Papa John’s (NASDAQ:PZZA) stock to $58.00, a decrease from the previous target of $60.00, while maintaining an Overweight rating on the shares. Currently trading at $45.35 with a market capitalization of $1.48 billion, the stock has gained nearly 12% year-to-date despite a challenging 32% decline over the past year. The revision followed Papa John’s fourth-quarter 2024 earnings report, which aligned with the preliminary figures released at the ICR Conference and revealed same-store sales and total unit openings that slightly exceeded expectations. According to InvestingPro, 4 analysts have recently revised their earnings estimates downward for the upcoming period.
Papa John’s also introduced its fiscal year 2025 guidance, which surpassed consensus estimates for domestic and international same-store sales at the midpoint, although it fell slightly short concerning the projected adjusted EBITDA. With annual revenue of $2.06 billion and a P/E ratio of 17.85x, the company maintains a solid market position. Salera noted the company had effectively communicated expectations for a softer first quarter of 2025 and highlighted the potential for growth driven by improving sequential comparable sales trends in North America throughout the fiscal year.
The analyst expressed confidence in Papa John’s early efforts to reinforce its brand strategy, citing enhanced advertising reach and continuous menu innovation, coupled with positive developments in international markets. These initiatives are expected to set a realistic performance target for the incoming CEO and management team.
Salera’s report emphasized that despite the modest reduction in the price target to $58, Papa John’s stock is projected to trade at approximately 12 times the next twelve months’ EBITDA forecast of $215.6 million. The Overweight rating suggests that Stephens continues to see the stock as a favorable investment opportunity, even with the adjusted price target.
In other recent news, Papa John’s International Inc. reported strong fourth-quarter earnings for 2024, surpassing analyst expectations with earnings per share (EPS) of $0.63 and revenue of $530.77 million, both exceeding forecasts. Despite this positive performance, the company’s guidance for 2025 indicated some challenges, with projected adjusted EBITDA between $200 million and $220 million, falling short of the consensus estimate of $220.7 million. UBS analyst Dennis Geiger maintained a Neutral rating for Papa John’s, noting the company’s strategic initiatives but emphasizing that macroeconomic pressures remain a concern. Meanwhile, BMO Capital Markets adjusted its price target for the company to $60 from $63, while retaining an Outperform rating, citing confidence in the brand’s long-term potential despite a challenging competitive environment.
Papa John’s outlined plans for modest growth in same-store sales and announced a review of its North American commissary network, which could lead to potential savings. The company also highlighted strategic cost reductions in restaurant build costs and strong growth in international markets, particularly in the Middle East and the UK. CEO Todd Penegore emphasized the company’s strategic shifts and focus on creating great experiences for customers and employees. The company’s long-term outlook includes system-wide sales growth of 2-5% in 2025 and plans to open 85-115 new restaurants in North America. Analysts from UBS and BMO Capital Markets highlighted the importance of evidence of progress in Papa John’s turnaround plans and expressed optimism about the company’s future trajectory.
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