Papa John's Stock Rises on Buyout Reports

Earlier this year Papa John's CEO resigned after being slammed for making a racial slur

Managing Editor
Oct 9, 2018 at 9:40 AM
facebook twitter linkedin

Controversial pizza chain Papa John's International, Inc. (NASDAQ:PZZA) is back in headlines this morning, this time because of takeover rumors. A report from the Wall Street Journal (subscription required) said that Nelson Peltz's Trian Fund Management -- which owns a 13% stake in fast food chain Wendy's (WEN) -- is evaluating a bid for the company. In response, shares of PZZA are up 6% at $53.44, at last check.

It's been anything but positive for Papa John's stock over the past year, as it's shed 28% year-over-year, and in mid-August plunged to a three-year low of $38.05. Adding resistance has been the 160-day moving average, a trendline which has pressured the shares since early 2017.

Surprisingly, analyst sentiment has been optimistic toward Papa John's stock, with four of the six covering analysts sporting a "strong buy" recommendation. However, the stock's average 12-month price target of $51.17 comes in at a deficit to current levels.

Also sporting optimism have been near-term options traders. This is per the security's Schaeffer's put/call open interest ratio (SOIR) of 0.37, which ranks in the low 13th percentile of its annual range. In other words, near-term options traders have rarely been more call-biased in the past year.

Lastly, while short interest on PZZA rose just 1.5% during the most recent reporting period, it currently represents 23% of the stock's total available float. At its average daily trading volume, it would take shorts over a week to buy back their bearish bets on Papa John's stock.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 


300x250 - Banner 3 - v1