Dave & Buster’s price target raised to $29 from $18 at UBS

UBS raised its price target on Dave & Buster’s (NASDAQ:PLAY) to $29.00 from $18.00 on Wednesday, while maintaining a Neutral rating on the entertainment and dining chain. The price target increase reflects improving industry valuations and early progress in the company’s strategic plans to address brand missteps.

Dave & Buster’s first-quarter results showed pressured sales amid a difficult macroeconomic environment and ongoing brand challenges, with same-store sales declining 8.4% for the quarter. The company’s margins and earnings per share also fell below expectations during the period.

Sales trends improved throughout the first quarter and into the first five weeks of the second quarter, with same-store sales down 2.2% quarter-to-date compared to the 4.3% decline seen in April. UBS noted this improvement as a likely early indicator of progress in the company’s "back to basics" strategic initiatives.

The restaurant chain reported positive same-store sales in 11 of the last 30 days, suggesting momentum may continue to build. Despite these improvements, UBS characterized Dave & Buster’s as still being in the early stages of a turnaround, with macroeconomic pressures remaining elevated.

UBS believes an eventual return to positive same-store sales represents potential upside for Dave & Buster’s shares, citing the company’s attractive margins, solid unit growth, and EBITDA potential. The firm views the current risk/reward profile as balanced given the challenging macro environment and limited visibility into the near to medium-term sales recovery trajectory.

In other recent news, Dave & Buster’s reported its first-quarter fiscal 2025 earnings, which showed a decline in same-store sales by 8.3%, missing analyst expectations. The company’s adjusted EBITDA for the quarter was $136 million, falling $6 million short of consensus estimates. Despite these setbacks, several firms have adjusted their price targets for the company. Truist Securities raised its price target to $29, maintaining a Hold rating, while BMO Capital increased its target to $35, citing early success with the company’s "Back to Basics" strategy.

Piper Sandler also raised its price target to $30, highlighting the improving sales trajectory, although the firm kept a Neutral rating. Benchmark reiterated a Hold rating, noting operational improvements and stabilizing performance since February. The company’s strategic shift to focus on core operational elements and return to television advertising appears to be yielding positive results. Overall, analyst firms have expressed cautious optimism about Dave & Buster’s recent developments, with some expecting further improvements in sales performance throughout 2025.

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