On Thursday, BMO Capital adjusted its stock price target for Papa John's International, Inc. (NASDAQ:PZZA) to $80 from the previous $90 while maintaining an Outperform rating. The revision follows the announcement that CEO Rob Lynch will depart the company on April 30 to take on a new role as CEO of another company.
In the interim, CFO Ravi Thanawala has been appointed to lead Papa John's as the board searches for a permanent CEO.
The company confirmed its operating profit and development outlook for 2024 but did not provide an update on its comparable sales guidance. BMO Capital cites heightened uncertainty due to the leadership transition, questions about the future trajectory of comparable sales, and the possibility of an earnings adjustment once new leadership is in place as reasons for the price target reduction.
The outgoing CEO, Lynch, will continue to provide advisory support to Papa John's through the month of April. Meanwhile, the board is actively seeking a new CEO to take the helm and guide the pizza chain forward.
Papa John's has reassured stakeholders that the company's financial projections for the year remain unchanged despite the executive shuffle. The company's commitment to its 2024 outlook suggests a level of stability and continuity in its business operations.
The lowered stock price target reflects BMO Capital's revised valuation multiple, which accounts for the uncertainties surrounding the CEO transition and its potential impact on Papa John's performance. The firm's Outperform rating indicates a belief that, despite these challenges, Papa John's stock is expected to perform better than the broader market.
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