On Friday, Loop Capital adjusted its price target for Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) shares, decreasing it to $63 from the previous $86, while still retaining a Buy rating on the stock. The adjustment follows the company's reported earnings for the first quarter of fiscal year 2024, which fell short of analyst expectations.
Dave & Buster's reported earnings per share (EPS) of $0.99 for the quarter ending in January, which was significantly lower than both Loop Capital's estimate of $1.87 and the consensus estimate of $1.73.
The company's adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also did not meet forecasts, coming in at $159 million, missing Loop Capital's projection of $187 million and the consensus estimate of $184 million.
The entertainment and dining venue's comparable sales decreased by 5.6% in the quarter, which was a more significant decline than Loop Capital had anticipated, having forecasted a 1.0% drop and compared to a consensus estimate of a 3.0% decrease.
Furthermore, Dave & Buster's total revenues for the quarter amounted to $588 million, a year-over-year decrease of 1.5%, and were below the estimated and consensus figure of $618 million.
Despite these setbacks, Loop Capital maintains a positive outlook on Dave & Buster's shares. The firm's decision to uphold a Buy rating comes with a revised price target based on 7 times the firm's revised fiscal year 2024 enterprise value to EBITDA estimate. This new price target reflects the challenges faced in the most recent quarter but indicates a continued confidence in the stock's potential performance.
In other recent news, Dave & Buster's Entertainment, Inc. reported Q1 2024 earnings, revealing a revenue of $588 million and adjusted EBITDA of $159 million, falling short of the consensus due to softer store sales and weaker margins.
Following these results, BMO Capital Markets adjusted its outlook, reducing the price target to $65 from $75, while maintaining an Outperform rating. Concurrently, UBS maintained a Neutral rating, acknowledging the challenges of persistent sales headwinds and margin pressures.
Despite these issues, Dave & Buster's has made recent strides in its strategic initiatives, including the expansion of seven new international franchise units and future store openings, aiming for over $1 billion in adjusted EBITDA. Additionally, the company reported $25 million in cost savings from the Main Event merger, targeting an additional $40-60 million.
According to BMO Capital and UBS, the company has addressed operational challenges and expects improved performance, maintaining a positive outlook for the future.
Despite a complex macro environment and labor performance issues, Dave & Buster's remains focused on organic growth and capital return to shareholders. These are among the recent developments for the company.
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