Papa John's International Inc. shares jumped Wednesday following an upgrade by a Janney Capital Markets analyst based on the company's potential to benefit from digital ordering trends.
THE SPARK: Analyst Mark Kalinowski upgraded his rating on the pizza chain to "Buy" from "Neutral," saying that he expects the company to continue to take market share from regional pizza chains based on an industry shift toward digital ordering.
THE BIG PICTURE: A number of national chains, such as Pizza Hut, Domino's and Papa John's, allow customers to order online and through mobile phone applications.
THE ANALYSIS: Kalinowski said this industry shift toward digital ordering favors national chains, which have more resources, than smaller, regional chains. The analyst also said that he expects food costs to ease in 2014, and said he expects same-store sales to improve. That's a key measure of growth because it strips out recently opened and closed stores and looks only at ongoing locations.
The upgrade comes ahead of Papa John's third-quarter earnings report in early November.
SHARE ACTION: Shares of Papa John's increased $1.82, or 2.5 percent, to $74.52 by late afternoon. Shares hit an all-time trading high of $75.21 earlier in the session. Its stock price has more than doubled since the beginning of 2013.