What Happened?
Shares of fast-food pizza chain Papa John’s (NASDAQ: PZZA) fell 5% in the afternoon session after Mizuho lowered its price target on the company's shares to $40 from $44.
The investment firm kept its "Neutral" rating on the stock, but the reduced price target suggested less optimism about the company's near-term growth prospects. This revision from a financial firm can lead investors to reconsider a stock's potential, often causing the price to fall as the market adjusts to the new, lower valuation. Mizuho's action was part of a broader adjustment of targets for the restaurant sector as the firm provided its outlook for 2026.
The shares closed the day at $36.22, down 4.5% from previous close.
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What Is The Market Telling Us
Papa John’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 2.5% on the news that reports revealed cautious analyst commentary and news of a $5 million legal settlement over its hiring practices.
An analyst at Jefferies reiterated a “Hold” rating on the stock, with a fiscal 2026 EBITDA forecast of approximately $205 million, below the Street's consensus estimate of $213 million. This followed a similar “Hold” rating from Stifel in the previous month.
Additionally, the company reached a $5 million settlement regarding a policy that prohibited its franchise locations from hiring employees from one another. Papa John's pledged to cease enforcing these hiring limitations. This news surfaced amid broader concerns about the company's performance, as its same-store sales had averaged annual declines over the previous two years, indicating soft demand.
Papa John's is down 10.1% since the beginning of the year, and at $36.23 per share, it is trading 34.5% below its 52-week high of $55.31 from October 2025. Investors who bought $1,000 worth of Papa John’s shares 5 years ago would now be looking at an investment worth $372.12.
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