Papa John's: Launching Coverage With Narrow Moat and $72 Fair Value; Shares Trade Fairly

We're initiating coverage on Papa John's International with a narrow moat rating and $72 fair value estimate, leaving shares trading in a range we'd consider fairly valued. The firm is the third-largest limited service pizza player in its home U.S. market and fourth-largest globally, with 5,700 global units and a pipeline of nearly 3,000 more through franchise development agreements. With the company occupying the premium position in quick-service restaurant pizzas, it has proven it is better able to pass along inflationary pressures to consumers with lower elasticity, generating 10% annualized comparable store sales growth since 2019, against just 4% at wide-moat Domino's and 1% at Pizza Hut (a wide-moat Yum Brands business), by our estimates.