Wednesday - Truist Securities has increased its price target for Dave & Buster's Entertainment Inc (NASDAQ:PLAY) shares to $78, up from the previous $75, while maintaining a Buy rating. The revision follows the company's fourth-quarter earnings, where despite a miss on same-store sales (SSS), there was an adjusted EBITDA beat.
The analyst from Truist Securities noted that Dave & Buster's is introducing various sales drivers that are anticipated to counteract near-term macroeconomic pressures.
These initiatives include increased game pricing, a new menu launch, value-oriented marketing, remodeling, and the addition of special events sales personnel. These strategies are expected to contribute to positive same-store sales by the second quarter of 2024.
Moreover, Truist Securities anticipates that Dave & Buster's will benefit from operating efficiencies that will aid in margin expansion. While there is an acknowledgment of risks to customer traffic due to the increases in menu and game prices, the analyst believes these risks are adequately reflected in the current stock valuation. The stock is trading at approximately a 6x enterprise value to EBITDA (EV/EBITDA) multiple for the year 2025 estimates.
The entertainment and dining venue's recent financial performance and strategic moves have led to a more optimistic outlook from Truist Securities. The firm's analysis suggests that Dave & Buster's is well-positioned to navigate the current economic landscape and improve its financial metrics in the upcoming quarters.
InvestingPro Insights
As Dave & Buster's Entertainment Inc (NASDAQ:PLAY) continues to implement strategic initiatives to enhance its financial performance, real-time data from InvestingPro provides additional context to the company's current standing. With a market capitalization of $2.49 billion and a trailing twelve-month revenue growth of 24.44%, Dave & Buster's demonstrates a robust expansion in its financial reach. Despite a slight quarterly revenue decline of 2.97%, the company's gross profit margin remains healthy at 29.53%.
InvestingPro Tips highlight that management's aggressive share buybacks and a strong return of 72.07% over the last year signal confidence in the company's future. Notably, the stock has experienced a significant price uptick of 73.17% over the last six months, indicating a bullish momentum amongst investors. Analysts predict profitability for the current year, aligning with the positive sentiment from Truist Securities.
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