Oppenheimer analyst Brian Bittner suggested Papa John's (NASDAQ: PZZA) could be a more logical takeover target for Restaurant Brands International (NYSE: QSR) than Domino's Pizza (NYSE: DPZ), which has been speculated upon.

Bittner said DPZ's larger size and valuation would require a major equity raise ($10B+) whereas PZZA could be fully-funded internally by cash and pro-forma leverage.

"DPZ's fundamentals are best-in-class, but PZZA's anatomy better fits QSR's deal characteristics: its footprint has most growth potential, its financial engineering synergies are clearest and its size/multiple is immediately digestible," the analyst added.

Thoughts on DPZ. We assume a 20% premium to DPZ's current share price, which suggests a $15-16B enterprise value. After assuming cash use and proforma leverage upped to 6x, QSR would then need to issue four shares for every DPZ share ($10-11B in equity). This would dilute 3G's stake to ~30%. Cost synergies appear limited, while technology synergies are less calculable.

Thoughts on PZZA. Assuming ~$3B deal (25% premium) requires no additional equity and leaves pro forma leverage near ~6x. It could also allow QSR to refranchise PZZA to near-100% (from 86%), accelerate global unit growth from only 2%-ish currently and drive cost synergies out of higher G&A structure and low-margin distribution business. Positive: Digital is >60% of orders. Negative: SSS are currently underperforming.

The analyst views a PH deal as least likely and most complex - YUM would have to be persuaded to sell.

Regardless, they believe QSR represents an attractive investment vehicle at a temporarily discounted valuation. The firm maintained an Outperform rating and price target of $75 on QSR.

For an analyst ratings summary and ratings history on Restaurant Brands International click here. For more ratings news on Restaurant Brands International click here.

Shares of Restaurant Brands International closed at $59.02 yesterday.