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Papa John’s International (NASDAQ:PZZA) is the top gainer in the restaurant sector after Bank of America began coverage of the pizza chain’s shares with a Buy rating.
BofA’s positive on PZZA is based in an expected reversal of comparable sales growth to low to mid-digit growth, driving franchisee volumes and the company’s top line growth. The firm also believes that the attractive economic unit and a long track record of international growth have prepared the company to exceed expectations.
Analyst Sara Senatore and her team remain of the opinion that aggregators have not fundamentally changed the demand for pizza because delivery orders replace meals in the same restaurant/kitchen or home preparation.
“Instead, we see softer pizza comparisons reflect a normalization in demand after two years of above-trend growth. Now that it’s mostly outperformed that normalization, we expect Papa Johns comparisons to return to a state stable in the low to mid-single digit range. scope.”
BofA set a $103 price target on PZZA to represent more than 25% up from Tuesday’s closing price. PZZA shares rose a 3.30% profit in early trading on Wednesday.
Seeking Alpha author Wolf Reports is also a new bull at Papa John’s.
