On August 3, 2016, Papa John’s (PZZA) was trading at $77.40. The share price might have factored in the estimates that we looked at in the previous part of this series.
In this part, we’ll look at analyst recommendations and estimated target prices for the stock over the next 12 months.
The better-than-expected 2Q16 results and the company’s increased SSSG (same-store sales growth) and EPS (earnings per share) guidance for 2016 could have compelled analysts to raise their target price for the next 12 months from $70.80 to $77.30. The new estimate represents a return potential of -0.1%.
Alton Stump of Longbow Research, who is more optimistic about the stock, expects Papa John’s share price to touch $90 in the next 12 months. That’s a return potential of 16.3%.
On the lower side, Mark E. Smith from Feltl and Company forecasts a target price of $69, which represents a fall of 10.8% from the current price.
The 12-month targets for Papa John’s peers are as follows:
According to a Bloomberg survey of six analysts, 50% have issued a “buy” recommendation, and 50% have a “hold” recommendation for Papa John’s (PZZA).
Papa John’s share price moves in tandem with analysts’ recommendations. As analysts raise their target prices for the next 12 months, the stock could also increase, and vice versa.
Keep in mind that if a share price is lower than its target price, it doesn’t necessarily mean you should automatically buy the stock. Before investing, you should carefully analyze the various metrics we’ve covered in this series.