Papa John’s stock falls toward 2-year low analyst sees signs of weak pizza sales

Shares of Papa John’s International Inc. slid 2.6% toward a near 2-year low in morning trading Tuesday, after Stifel Nicolaus analyst Chris O’Cull cut his price target, citing signs that the pizza seller was “not delivering” in recent months. “We believe quick-service pizza may report the weakest SRS [same-restaurant sales] performance of any restaurant category during 3Q,” O’Cull wrote in a note to clients. While it’s “unclear” what’s been hurting pizza consumption, he believes it may be a combination of things, such as consumer fatigue toward pizza; more delivery and take-out options as more restaurants have pivoted toward those sales channels; and a lack of pizza delivery drivers, which is limited capacity. O’Cull said he believes Papa John’s SRS are trending in the negative low- to mid-single digit percentage range from a year ago, which compares with the FactSet consensus for third-quarter SRS of 0.3% growth. O’Cull cut his stock price target to $100 from $120, but reiterated his buy rating as his new target still implies 25% upside from current levels. The stock, on track for the lowest close since November 2020, has tumbled 44.0% year to date, while shares of fellow pizza chain Domino’s Pizza Inc. have sunk 41.0% and the S&P 500 has lost 19.0%.

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