Shares of Papa John’s International, Inc. are rising Monday following a report about a potential takeover of the pizza company.

PZZA is charging ahead with explosive momentum. Get the latest updates here.

What To Know: Private equity firm TriArtisan Capital Advisors is leading a potential purchase of Papa John's priced at $65 per share, according to ABC Money. If the all-cash deal goes through, it would give the fast food chain a valuation of $2.7 billion.

Papa John’s stock jumped on the news and was up more than 7% at last check, according to Benzinga Pro.

The report states that TriArtisan sees Papa John's as undervalued, and believes the public market hasn’t priced in its delivery network and franchise system across the United States. The firm believes Papa John’s is well-positioned for streamlined operations and wider consolidation across the restaurant industry.

The investor group reportedly made an official offer and is currently discussing finalizing a deal. The report indicates that talks are still ongoing and may not result in a takeover.

Papa John’s reported third-quarter earnings last week, missing estimates on the top and bottom lines. Third-quarter revenue of $508.15 million fell short of estimates of $523.79 million, and adjusted earnings of 32 cents per share was below forecasts of 41 cents per share.

In response to the lukewarm earnings report, several analysts dropped their price targets. BMO Capital analyst Andrew Strelzik lowered its price target to $54 from $60 and kept an Outperform rating. Stephens analyst Jim Salera lowered its target to $49 from $50 and kept an Overweight rating

Earlier this year, TriArtisan announced that it would purchase Denny’s, another fast food joint, for $620 million. The transaction is supposed to be completed next year, according to the report.

PZZA Analysis: Papa John’s is trading approximately 8.5% below its 50-day moving average of $48.22 and just 0.5% below its 200-day moving average of $44.35. The proximity to these moving averages suggests that the stock is at a critical juncture, where a sustained move above these averages could signal a potential reversal in its longer-term trend. The relative strength index (RSI) is at 33.52, indicating a neutral position, which could imply that the stock has room to move either way depending on market sentiment.

In terms of support and resistance levels, the calculated support stands at $38.25, while resistance is identified at $49.00. Should the stock maintain its current momentum, overcoming the resistance level could pave the way for a more robust rally, potentially targeting the upper end of its 52-week range. Conversely, if the price retraces, the support level at $38.25 will be critical in determining whether the recent gains can be sustained.

PZZA Price Action: Papa John’s shares were up 7.38% at $44.11 at the time of publication on Monday. The stock is trading within its 52-week range of $30.16 to $55.74.

Read More:

Papa John’s Stock Falls After Apollo Pulls Bid To Take Company Private

Image: Shutterstock