PZZA - Papa John's delivers a 3% gain after Bank of America points to upside for the pizza stock

Papa John's International ( NASDAQ: PZZA ) is the top gainer in the restaurant sector after Bank of America started off coverage on the pizza chain stock with a Buy rating.

BofA's positive on PZZA is based on an expected reversion of comparable sales growth to growth low- to mid-single digits, boosting franchisee volumes and company topline growth. The firm also thinks attractive unit economics and a long international growth runway set up the company to beat expectations.

Analyst Sara Senatore and team remain of the view that demand for pizza has been fundamentally unchanged by aggregators because delivery orders replace meals in the same restaurant/cuisine or at-home prep.

"Instead, we see softer pizza comps as reflecting a normalization of demand after two years of above-trend growth. Now mostly past that normalization, we expect Papa Johns comps to return to a steady state in the low- to mid-single-digit range."

BofA set a price target of $103 on PZZA to rep more than upside 25% upside from Tuesday's closing price. Shares of PZZA ran up a 3.30% gain in early trading on Wednesday.

Seeking Alpha author Wolf Reports is also a new bull on Papa John's.

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