Stifel analysts downgraded shares of Papa John's (NASDAQ:PZZA) to Hold from Buy, cutting the price target to $65 from $81 per share in a note Friday.
The analysts told investors that despite delivering better-than-expected North America comparisons and margin performance driven by transaction growth, PZZA posted a disappointing 3Q EPS of $0.53.
This was due to greater-than-expected dilution from the recently acquired franchise stores in the UK, the analysts noted.
"The company also lowered its unit opening guidance for 2023 and indicated that 2024 would be a challenging year for international development and N.A. comp growth (low end of 2-4% long-term guidance)," the analysts said.
"Our Hold thesis reflects our view that performance during the next several quarters will be volatile given the UK market turnaround, sales and development obstacles in key international markets, like the Middle East, and our view that the promotional activity in the U.S. QSR Pizza segment has intensified," they added.
The analysts also noted that much of the bad news is priced in the stock, while there are also "limited catalysts."