On Tuesday, Truist Securities adjusted its price target for Dave & Buster's (NASDAQ:PLAY), bringing it down to $67.00 from the previous $78.00, while retaining a Buy rating on the stock. The revision comes ahead of the company's first-quarter 2024 results, which are scheduled to be released after the market closes on June 12.
The analyst from Truist Securities anticipates a mixed outcome for the quarter, with potential shortfalls in same-store sales (SSS) and EBITDA. However, these concerns are believed to be balanced by low investor expectations, as indicated by a trading multiple of approximately 5 times the estimated EV/EBITDA for 2025 and a three-and-a-half-year peak in short interest. Additionally, the company is expected to provide optimistic remarks regarding its sales initiatives.
Dave & Buster's has been facing slower sales recovery than anticipated, which the analyst attributes to broader economic challenges that have also impacted restaurant peers. Despite these headwinds, the analyst predicts that the company's sales initiatives will likely lead to a rebound by the fourth quarter of 2024. These initiatives include the impact of remodeling efforts and the hiring of special events sales personnel.
The revised estimate and price target reflect a 40% increase from the current trading levels of the company's stock. The Truist Securities analyst's outlook suggests confidence in Dave & Buster's ability to navigate through macroeconomic difficulties and leverage its sales strategies to achieve stronger performance in the latter part of the year.
In other recent news, Dave & Buster's has seen a flurry of financial activity and strategic moves.
UBS has reduced its price target for Dave & Buster's from $66 to $56 but maintains a neutral rating on the stock. This comes ahead of the entertainment chain's first-quarter earnings report, where investors are predicting a slight downturn in same-store sales. Upcoming strategies to boost sales are being closely watched, with a keen interest in the company's potential shift to positive same-store sales.
Dave & Buster's recent Q4 results showcased robust earnings, with revenues reaching $599 million and an adjusted EBITDA of $152 million.
Furthermore, the company has announced the appointment of Darin Harper as its new CFO, effective from June 17, 2024. Harper brings significant experience to the role, having previously served as CFO for Main Event Entertainment, Inc., and Group CFO for Ardent Leisure.
These are recent developments in Dave & Buster's ongoing efforts to expand and enhance its position in the entertainment and dining market.
InvestingPro Insights
With Dave & Buster's (NASDAQ:PLAY) preparing to release its first-quarter results, a closer look at real-time InvestingPro data and insights might provide a clearer picture of the company's financial health and market position. The company's market capitalization stands at a solid $1.94 billion, which, coupled with a P/E ratio of 16.23, suggests that investors have maintained confidence in its earnings potential. However, the stock has experienced significant volatility, as evidenced by a 21.5% drop in the three-month price total return.
On the operational front, Dave & Buster's has shown a commendable revenue growth of 12.26% over the last twelve months as of Q4 2024, indicating an upward trajectory in its business performance. This is further supported by a robust gross profit margin of 32.83%, showcasing efficient cost management. Despite these positive indicators, an InvestingPro Tip points out that the company's short-term obligations exceed its liquid assets, which may raise concerns about its immediate financial flexibility.
Investors looking for deeper insights can find additional InvestingPro Tips for Dave & Buster's, which could help in making a more informed assessment of the stock’s potential. For example, while the company is trading at a high Price/Book multiple of 7.72, indicating a premium valuation, analysts predict profitability this year. For those considering an investment, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to the full suite of InvestingPro Tips, which currently includes 6 more tips for Dave & Buster's.
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