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© Reuters. Dave & Buster’s Entertainment (PLAY) ‘still grossly underrated’ – Raymond James
Raymond James analyst Brian Vaccaro reiterated a Strong Buy rating and $55 per share on Dave & Buster’s Entertainment (PLAY) in a note to clients on Monday ahead of the company’s F3Q22 earnings release scheduled for Dec. 6. target price.
Vaccaro said the firm believes the stock is undervalued, while they see solid third-quarter results and upside in the fiscal fourth quarter.
“Expect strong F3Q comps (D&B +15%) and see upside to F4Q consensus sales ($549m RJE vs. $531m consensus). Our analysis of third-party traffic data supports our F3Q comp estimate (assuming August spreads remain constant for the remainder of the quarter), while November’s QTD trend appears to be in a similar range, albeit with a more difficult multi-year comparison (possibly thanks to the Eat n’ Play promotion return),” the analysts wrote.
Raymond James also believes that PLAY’s adjusted EBITDA margin is recovering and surpassing 2019 levels by about 200 basis points.
“[We] The belief that PLAY’s FY23 EV/EBITDA remains grossly undervalued in the mid-5s seems at odds with the company’s strong margin profile (teens EBIT margin) and high single-digit percentage growth exiting the pandemic,” the analysis division added.
Shares of Dave & Buster rose nearly 2% in Monday’s trading. The stock is up 2% so far in 2022.
Sam Buchda
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