Small-Cap Highlights: Papa John's Slump, Perfect's Delisting, Eli Lilly, and Psychedelics

Bank of America advised investors to sell their Papa John's shares. Shares of a psychedelic drug developer rose after Eli Lilly expressed interest in the company, while Perfect Corp. announced plans to delist by the end of the year. The week’s top stories from July 13–17 are featured in the Oninvest digest.

Bank of America is advising investors to sell shares of Papa John's International, which operates the pizza chain of the same name. Analysts were alarmed by the departure of one of the company’s key executives and a larger-than-expected drop in sales. At the same time, BofA lowered its price target for Papa John’s shares by 19% to $34.

Investbank revised its forecast following the dismissal of Papa John's Chief Financial Officer Ravi Tanawalu on June 30, believing that the change in the company's leadership would make it more difficult to forecast financial results.

Another factor behind the revision was increased competition among pizza chains. Papa John’s comparable sales in the U.S. fell 6.4% year-over-year in the first quarter, while Domino’s Pizza’s comparable sales rose 0.9% over the same period. However, most Wall Street analysts are taking a wait-and-see approach: ten recommend holding the company’s stock, six recommend buying, and one recommends selling.

Pharmaceutical giant Eli Lilly is in talks to acquire AtaiBeckley, a small company developing drugs to treat depression using psychedelic substances. Bloomberg reported this, citing sources. If the deal goes through, it will help Eli Lilly strengthen its position in the market for neurobiological drugs, where the company is known for its antidepressant “Prozac.” AtaiBeckley’s stock price soared 33.4% on July 16.

AtaiBeckley’s portfolio currently includes three main projects based on psychedelic compounds. Two of them are in mid-stage clinical trials, while another, BPL-003, is in the final stage. It is a fast-acting nasal spray intended to treat treatment-resistant depression.

Most Wall Street analysts recommend buying the company's stock: it has 11 "Buy" ratings and 4 "Hold" ratings.

Perfect Corp., a small-cap developer of AI solutions in the beauty industry and a partner to global brands, including L'Oréal, has entered into an agreement to sell its business to ProjectNY, a company owned by its founder Alice Chang, and to subsequently delist. The news led to a rise in the stock price of more than 10%.

The transaction price will be $2 per share, which is approximately 48% higher than the closing price on March 17, the day before the company received a preliminary offer from a consortium of investors led by Chang. Perfect Corp.’s board of directors has already approved the merger; now it must be approved by at least two-thirds of the shareholders. The parties plan to complete the transaction in the fourth quarter of 2026.

Perfect Corp. is known for its smartphone apps for consumers and brands, including YouCam Perfect for photo retouching and YouCam Makeup for virtual makeup application. Among its partners—L’Oréal, Estée Lauder, Sephora, Shiseido, and Avon—the online try-on feature helps them boost sales.

Three Wall Street analysts who track the company's performance recommend holding its stock. The average price target is nearly $2, which aligns with their valuation for the ProjectNY deal.

Braiin, an Australian small-cap developer of AI solutions for automation and predictive analytics, has announced the launch of a new AI agent for the real estate industry. Unlike traditional AI, this agent—ARIA— understands business objectives, coordinates various systems, and performs basic operational tasks, passing only important decisions or exceptions on to humans. The launch of ARIA will enable the company to enter the real estate software market, which, according to Grand View Research forecasts, is expected to grow by 12.2% annually and reach $32 billion by 2033.

Braiin’s stock soared nearly 17% on the Nasdaq on July 13, despite a sell-off in the sector caused by the escalation of the conflict in the Middle East. Only one Wall Street analyst has rated Braiin’s stock; he recommends buying the company’s shares.