NEW YORK (TheStreet) -- Papa John's International (PZZA) - Get Report  shares are sliding 3.29% to $70.90 on Friday after the pizza chain operator got its ratings dropped at KeyBanc Capital Markets to "sector weight" from "overweight."

Analysts said the company needs time "to grow into the current premium valuation."

However, the firm is confident in its long-term growth prospects as it looks like the company is trying to cut operating loss in China.

In addition, looking ahead, the company may see benefits from its international segment, according to the analyst note.

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Based in Louisville, KY, Papa Johns operates and franchises pizza delivery and carryout restaurants under the trademark Papa Johns in the U.S. and internationally.

Separately, TheStreet Ratings team rates PAPA JOHNS INTERNATIONAL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate PAPA JOHNS INTERNATIONAL INC (PZZA) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PZZA's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 4.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, PAPA JOHNS INTERNATIONAL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $37.73 million or 35.30% when compared to the same quarter last year. In addition, PAPA JOHNS INTERNATIONAL INC has also vastly surpassed the industry average cash flow growth rate of -59.32%.
  • Compared to its closing price of one year ago, PZZA's share price has jumped by 58.49%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • PAPA JOHNS INTERNATIONAL INC's earnings per share declined by 32.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PAPA JOHNS INTERNATIONAL INC increased its bottom line by earning $1.76 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.76).
  • You can view the full analysis from the report here: PZZA