At least, that's the view of Hedgeye analysts Howard Penney and Shayne Laidlaw, who added Papa John's to their "best idea" short list on Monday, Aug. 28, according to Bloomberg data.
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"As the U.S. delivery space continues to mature, pizza players, who have historically had stranglehold on the space will lose steam as consumers will have anything and everything available to them," Penney and Laidlaw wrote in a note on Monday.
The analysts previously added competitor Domino's Pizza Inc. (DPZ) - Get Report to their short list on July 26, noting that the dominant pizza chain player "is facing real competition" in delivery. While Domino's historically has led delivery innovation in the pizza space, being the first to launch an order-tracking system and ordering services through social media, fast-food companies in other categories are now encroaching on its territory.
Fast-food chains from McDonald's Corp. (MCD) - Get Report to Chipotle Mexican Grill Inc. (CMG) - Get Report to Buffalo Wild Wings (BWLD) , among others, have begun testing delivery, giving consumers an abundance of choices other than pizza, once the only food option available for delivery.
Hedgeye's Penney and Laidlaw said Papa John's North American comparable-store sales are down 180 basis points from the fourth quarter of 2016 to the first quarter of this year and have fallen 60 basis points between the first and second quarters. Year to date, Papa John's stock has slipped 9.56%.
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