Here’s Why This Analyst Remains Bullish On Dave & Buster’s Despite Near-Term Comp Hurdles – Dave & Buster’s Enter (NASDAQ:PLAY)

  • Raymond James analyst Brian M.Vaccaro reiterated a Strong Buy rating on the shares of Dave & Buster’s Entertainment, Inc. PLAY with a price target of $55 ahead of its Q4 earnings.
  • PLAY shares are down about 17% since mid-February, which the analyst attributes to the broader risk-off trade and near-term comp concerns as the company begins to lap more difficult comparisons in March/April.
  • The analyst believes this creates an attractive entry point.
  • The analyst acknowledges y/y comparable sales could turn negative in the near term as the company laps particularly difficult comparisons over the next few months.
  • The analyst said that the company’s analyst day could be a positive catalyst as the new team is expected to unveil its D&B revitalization plan and multi-year growth outlook.
  • If the company provides 2023 guidance, the analyst suspects it could embed flat/slightly positive y/y comparable sales.
  • The analyst believes PLAY offers a compelling risk/reward from current depressed levels with 50-90% upside under the base/bull cases versus about 30% downside under the bear case.
  • The analyst thinks the stock’s current valuation seems inconsistent with the company’s strong margin profile and high single digit% unit growth exiting the pandemic.
  • The analyst said the company weathered the COVID-19 storm sustained by two equity raises and a high-yield note offering, and is generating higher sales/margins versus pre-pandemic levels.
  • Exiting the pandemic, the company’s new management team is focused on revitalizing/sharpening the D&B brand/ops and re-accelerating unit growth in the high single-digit % range, remarked the analyst.
  • Price Action: PLAY shares are trading lower by 0.42% at $35.89 on the last check Thursday.

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