Ariana Research
Long/short equity, deep value, special situations

Reiterate Papa Murphy's Short Thesis: Q2 2014 Update

Since initially posting our short thesis on Papa Murphy's Holdings (NASDAQ:FRSH) ("Papa Murphy", "FRSH", or the "Company") this past May, the short thesis has become increasingly compelling. One of the key drivers to the short thesis is the lack of franchisee profitability and accelerated closures/issues outside of the Pacific Northwest, which should ultimately lead to significantly reduced expectations as the perception of the Company rotates from that of a growing fast-casual chain (for which it is not) to that of a mature chain.

We re-iterate our short thesis, as there are two near-term catalysts which will potentially cause the equity to re-rate to our "super-optimistic" price target of ~$5 per share or roughly 40% upside to the short

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