BTIG downgrades Papa John's stock on CEO departure

BTIG has downgraded its rating on Papa John's (PZZA) shares from Buy to Neutral, following the departure of the company's CEO, Rob Lynch. Lynch has left Papa John's to assume a position at another fast-food chain, Shake Shack.

Yahoo Finance's Julie Hyman and Josh Lipton break down the details.

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Editor's note: This article was written by Angel Smith

Video transcript

JULIE HYMAN: Let's also talk about Papa John's, which is being hit with a downgrade. BTIG slashing its rating on the stock to neutral from buy. The move comes after the departure of CEO Rob Lynch, who was just hired away from Papa John's to go to Shake Shack. Now, this is not the only downgrade that has come from Papa John's in the wake of this news. But the stock continues to fall after Lynch basically got poached to go over to Shake Shack.

JOSH LIPTON: Yeah. I mean, a couple of different ratings change. Look at the team at Stifel, by the way, by the way, they weighed in to Julie, Reeder sell. They didn't like it before, they don't like it now either. Expect the CEO departure they told clients to be disruptive, could impact franchises willingness to accelerate development. Says they are in a weak competitive position in a tough category.

JULIE HYMAN: Yeah. And they talk about that is BTIG, that is Peter Saleh over there, talking about the turnover that's already been seen at Papa John's. Now, the CFO Ravi Thanawala is the interim CEO, and Saleh says he'll, they were confident in his leadership. But he's only been at Papa John's for less than a year, and was at Nike before. So he doesn't have restaurant operating experience specifically, and there's been other executive turnover there. So that's one of the reasons also that BTIG is getting less positive on the name.

JOSH LIPTON: Yeah, it has not been easy to be long. Papa John's deep in the red this year and over the past 12 months.