As of November 22, 2017, Papa John’s (PZZA) was trading at $57.0. On the same day, analysts expected the company’s stock price to reach $72.86 in the next 12 months, which represents a return potential of 27.8%.
The lower 2017 EPS (earnings per share) guidance and fast food and fast casual restaurants’ entry into the delivery business appear to have compelled analysts to lower their target price. On November 15, 2017, CitiGroup cut its target price from $90 to $71. On November 1, 2017, Stifel lowered its target price from $65 to $60, while Jefferies reduced its target price from $83 to $65.
Currently, Papa John’s is trading below analysts’ target price. However, it doesn’t mean an automatic “buy.” Investors should carefully analyze various parameters before making any investment decisions.
Of the 20 analysts that follow Domino’s Pizza (DPZ), 40% recommend “buy” and 60.0% recommend a “hold.” In the next 12 months, analysts expect Domino’s stock price to reach $215.81, which represents a return potential of 22.2%.
Of the 25 analysts that follow Yum! Brands (YUM), 48.0% recommend a “buy” and 52.0% recommend a “hold.” In the next 12 months, analysts expect the company’s stock price to reach $82.3, which represents a return potential of 3.9%.
As of November 22, 2017, Papa John’s was trading at a forward PE (price-to-earnings) multiple of 19.6x—compared to 21.3x before the announcement of its 3Q17 earnings. On the same day, Domino’s Pizza and Yum! Brands were trading at a forward PE multiple of 26.1x and 25.3x, respectively.