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BMO Capital raised its price target on Dave & Buster’s (NASDAQ:PLAY) stock to $35.00 from $30.00 on Wednesday, while maintaining an Outperform rating on the entertainment and dining chain.
The price target increase follows the company’s first-quarter fiscal 2025 EBITDA of $136 million, which fell $6 million below consensus estimates due to repair and maintenance investments and pre-opening cost timing. The company maintains a significant debt burden of $3.4 billion, with short-term obligations exceeding liquid assets, as highlighted in InvestingPro’s financial health analysis.
Comparable sales declined 8.3% in the quarter, but BMO Capital noted traffic improved throughout the period, with quarter-to-date comparable sales down just 2.2% and positive comparable sales in 11 of the past 30 days.
The firm expressed encouragement about early traction from Dave & Buster’s "Back to Basics" strategy, which has comparable sales performing ahead of BMO’s expectations and approaching potential positive growth.
BMO Capital raised its EBITDA outlook for the company while acknowledging "prior fits and starts in turning around comps and macro risks" that could affect the entertainment chain’s performance.
In other recent news, Dave & Buster’s reported its fiscal first-quarter 2025 earnings, revealing an adjusted earnings per share of $0.76, which fell short of the expected $1.01. The company also announced total revenues of $567.7 million, slightly below the anticipated $573.25 million, marking a 3.5% year-over-year decrease. Despite these misses, Dave & Buster’s has seen sequential monthly improvements in same-store sales, attributed to its "Back-to-Basics" initiatives, including a return to television advertising and enhanced menu offerings. Analysts at Loop Capital raised their price target for Dave & Buster’s to $46.00, citing early second-quarter trends as a positive indicator, while Piper Sandler increased their target to $30.00, acknowledging the improving sales trajectory. Benchmark maintained a Hold rating on the stock, noting operational improvements and a stronger-than-industry performance. The company’s strategic pivot appears to be yielding initial positive results as it focuses on core operational elements. These developments indicate that Dave & Buster’s is working diligently to stabilize its business and drive a recovery in its financial performance.
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