Truist Securities adjusted its outlook on Dave & Buster’s Entertainment Inc (NASDAQ:PLAY), reducing the price target from $64.00 to $59.00. The firm maintained a Buy rating on the stock despite anticipating a sales miss in the second quarter of 2024. The adjustment reflects concerns about macroeconomic pressures impacting the company’s revenue growth.
The updated price target comes as Truist Securities anticipates a challenging second-quarter earnings report for Dave & Buster’s. According to Truist’s analysis, the company is likely to experience a significant sales shortfall, estimated at around 2.5% below consensus.
The firm believes that Dave & Buster’s sales initiatives are poised to help the company gain market share. These initiatives include the addition of eight remodels during the quarter and the testing of ‘surge’ game pricing strategies. Dave & Buster’s has also experimented with various marketing tactics that may yield positive results, particularly during the upcoming holiday season.
The decision to lower the price target to $59 reflects a cautious stance on the near-term performance of Dave & Buster’s, taking into account the expected impact of macroeconomic factors on sales.
In other recent news, Dave & Buster’s Entertainment, Inc. reported a challenging Q1 in the fiscal year 2024, with earnings per share of $0.99 and revenue of $588 million, falling short of analyst expectations. As a result, Loop Capital and BMO Capital Markets reduced their price targets to $63 and $65, respectively, while UBS maintained a Neutral rating. The company also announced the expansion of seven new international franchise units and future store openings, aiming for an adjusted EBITDA of over $1 billion.
The Main Event merger resulted in $25 million in cost savings, with an additional $40-60 million expected. Shareholders ratified the appointment of KPMG LLP as the company’s Independent Registered Public Accounting Firm for the fiscal year 2023 and approved the company’s executive compensation plan.
InvestingPro Insights
As Dave & Buster’s Entertainment Inc (NASDAQ:PLAY) braces for its upcoming earnings report, a glance at the real-time data from InvestingPro provides a clearer picture of the company’s financial health and market position. With a market capitalization of $1.31 billion and a P/E ratio that has adjusted to 10.95 over the last twelve months as of Q1 2025, investors can gauge the company’s valuation in the context of its earnings. Despite a modest revenue growth of 4.05% over the same period, challenges are evident with a quarterly revenue contraction of -1.54% in Q1 2025, hinting at the pressures Truist Securities highlighted.
InvestingPro Tips reveal that management has been actively buying back shares, which could signal confidence in the company’s value proposition. However, the stock has faced a tough time in the market with a 1-month price total return of -13.39% and a 3-month price total return of -32.52%, reflecting the volatility and the bearish sentiment that could be contributing to Truist’s revised price target. It’s worth noting that analysts have also revised their earnings downwards for the upcoming period, aligning with Truist’s concerns about a potential sales miss.
For investors seeking a more in-depth analysis, InvestingPro offers additional tips on Dave & Buster’s, providing a comprehensive view of the company’s strategic moves and financial metrics. As the market anticipates the next earnings date on September 4, 2024, these insights could be critical in making informed investment decisions. Visit InvestingPro for a full spectrum of tips and data.
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