Papa John's (PZZA) Comps Return to Flat - Longbow

Longbow Research analyst Alton Stump reiterated a Buy rating and $63.00 price target on Papa John\'s (NASDAQ: PZZA) noting that checks with Papa John’s franchisees indicate that U.S. system-wide same-store sales were flat in 3Q19, below his prior estimate for 1.6% growth but slightly better than consensus of a decline of -0.4%.

The analyst offered 4 insights:

1) An implied 2-year stack decline of 9.8% in 3Q representing a 200 bp improvement from PZZA’s reported North America system-wide 2-year stacked decline of 11.8% in 2Q19.

2) Our contacts indicated the largest driver behind the improvement in 2-year stacks sequentially was simply the fact founder John Schnatter’s comments that went public in July 2018 are moving further into the rearview mirror for most customers

3) Respondents were pleased to see corporate introduce television commercials with Shaquille O’Neal in early September, but there was no noticeable lift to same-store sales to date from the new marketing campaign

4) U.S. system-wide same-store sales were up 3-4% to date in 4Q. While still early in the quarter, this is tracking nicely ahead of our estimate for 1.8% comp growth for 4Q and consensus at up 1.6%

Summing up his data points, the analyst stated "We think a return by PZZA to flat North American system-wide same-stores sales for the first time since 3Q17 will be viewed positively by most investors".

For an analyst ratings summary and ratings history on Papa John\'s click here. For more ratings news on Papa John\'s click here.

Shares of Papa John\'s closed at $53.08 yesterday.

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