On Friday, BTIG adjusted its rating on Papa John's International Inc. (NASDAQ:PZZA) stock, downgrading it from "Buy" to "Neutral." The shift in rating follows the recent departure of the pizza company's CEO. The BTIG analyst expressed concerns over the ongoing executive turnover at Papa John's, which has seen changes from the CFO to the Chief Operating Officer in the past few years.
The analyst highlighted the potential time required to appoint a new CEO and to formulate and execute a new growth strategy. The estimate is that finding a successor could take several months, with an additional half a year needed to develop and implement a growth plan. These factors contribute to the decision to downgrade the stock's rating.
Despite the downgrade, the analyst acknowledged a positive aspect for Papa John's, pointing to an upcoming increase in national advertising that could benefit the company. However, the optimism is tempered by worries about rising development costs and operational missteps, particularly in international markets.
Papa John's is also facing specific challenges in the UK market, as well as what the analyst describes as "lackluster development trends." These issues are contributing factors to the analyst's decision to adopt a more cautious stance on the stock until the company's direction and leadership stabilize.
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