11:17 AM EDT, 08/09/2024 (MT Newswires) -- Papa John's International's (PZZA) current valuation reflects an "overly pessimistic" assessment of its long-term growth potential and underlying earnings power even as the pizza chain faces short-term same-store sales fluctuations, Wedbush said in a note emailed Thursday.

Papa John's Q2 earnings exceeded expectations due to better-than-expected performance in company-owned stores and operating margin. However, the company lowered its sales growth forecast for the year due to ongoing challenges in the North American market, Wedbush said.

The company has cut its 2024 North American same store sales growth forecast due to declining customer transactions and weaker delivery and carryout performance, Wedbush said.

But "incoming CEO Penegor believes [Papa John's] has an opportunity to (among other things) identify and promote value in a differentiated way vs. the competition, to focus on enhancing the digital experience, and to render loyalty a more compelling offering."

Wedbush has reduced the company's EPS estimate to $2.07 from $2.32 and the 2025 EPS estimate to $2.32 from $2.64, the mote said.

Wedbush maintained an outperform rating on Papa John's with a 12-month price target of $51.

Price: 43.82, Change: +0.59, Percent Change: +1.35