DexCom earnings beat by $0.03, revenue topped estimates
On Wednesday, BMO Capital Markets adjusted its outlook on Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY) by reducing the price target on the company's shares to $30 from the previous $47, while retaining an Outperform rating. The adjustment came after the company's fourth-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal year 2024 reported $127 million, missing the consensus by $2 million. The shortfall was partially offset by lower general and administrative expenses and better cost management at the store level.
Dave & Buster's same-store sales saw a 9.4% decline but showed signs of improvement in March and April. This uptick followed efforts to correct execution issues identified during the tenure of the company's recently departed CEO. Despite anticipating further progress, BMO Capital expressed limited confidence due to the uncertain macroeconomic environment.
The firm also pointed to another strategic "reset" aimed at enhancing execution and testing new initiatives, suggesting that significant improvements to the broader brand may take longer to materialize. Consequently, BMO Capital has revised its estimates downward in line with the new price target.
The rationale behind maintaining the Outperform rating, despite the reduction in the price target, is supported by what BMO Capital perceives as an inexpensive valuation of Dave & Buster's shares. The firm believes the current stock price presents a skewed risk/reward profile that could favor investors.
In other recent news, Dave & Buster's Entertainment reported its fourth-quarter fiscal 2024 earnings, revealing a slight miss on earnings per share (EPS) expectations, with an adjusted EPS of $0.69, falling short of the forecasted $0.72. Revenue also came in below expectations at $534.5 million compared to the anticipated $549.05 million. Piper Sandler analyst Brian Mullan lowered the price target for Dave & Buster's shares to $22.00 from $33.00, maintaining a Neutral rating, following the company's fiscal fourth-quarter results. Similarly, Raymond (NSE:RYMD) James analyst Brian Vaccaro maintained a Market Perform rating, noting that comparable store sales decreased by 9.4%, although improved store margins helped offset the sales decline.
Benchmark analysts maintained a Hold rating on Dave & Buster's stock, expressing caution due to underwhelming earnings results and declining comparable store sales. The analysts highlighted concerns about the sustainability of the recent improvements in customer traffic and sales, suggesting that the recovery might be temporary. Dave & Buster's management pointed out an uptick in business trends during March and April, citing increased customer traffic and new game introductions as positive developments. However, uncertainty remains regarding the company's remodel program and cost-cutting measures, which could affect customer experience and sales growth. Despite these challenges, the company is focusing on revitalizing its business model, including the search for a new CEO and plans to open new stores.
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