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On Wednesday, Truist Securities adjusted its outlook on Dave & Buster’s Entertainment Inc. (NASDAQ:PLAY), reducing the price target from $27.00 to $21.00 while keeping a Hold rating on the shares. The move comes as the firm sets expectations for the company’s fourth-quarter 2024 results, which are scheduled to be announced on April 7, after the market closes.
Truist Securities anticipates that Dave & Buster’s same-store sales (SSS) and adjusted EBITDA may not meet expectations but suggests that this potential shortfall is already reflected in the stock’s year-to-date performance. The stock has declined by 38% compared to the S&P 500’s 4% decrease.
According to Truist, there has been some improvement in same-store sales during March, although the figures remain negative. Dave & Buster’s is in the process of introducing new games, which could influence future performance. Analysts are looking forward to the company’s commentary on the outcomes of remodels that have been more aggressively marketed. However, they believe it is premature to determine the success of these efforts. The recent pace of the remodels implies a degree of caution from the management side.
The firm has also noted that Dave & Buster’s has implemented additional amusement pricing, which Truist views as a risky strategy. Despite the near-term concerns, Truist expects the company to show solid development in the year 2025.
The update from Truist Securities comes as investors and analysts alike monitor the entertainment and dining company’s strategies and financial health closely, especially in the context of its upcoming financial report. With analyst targets ranging from $27 to $48, InvestingPro subscribers can access 15+ additional exclusive insights and a comprehensive Pro Research Report, which provides detailed analysis of Dave & Buster’s financial health, valuation metrics, and growth prospects.
In other recent news, Dave & Buster’s reported significant developments impacting its financial outlook and leadership team. S&P Global Ratings revised its outlook for the company to negative, citing weaker profitability and cash flow, with expectations for continued same-store sales declines and flat adjusted EBITDA margins. The company is projected to face ongoing sales pressure due to changing consumer spending habits and increased competition. Despite these challenges, Dave & Buster’s is making strategic leadership changes, promoting Cory Hatton to Head of Entertainment Finance to oversee financial strategies for its core division. Additionally, Scott Ross has joined the Board of Directors, bringing financial expertise from his role at Hill Path Capital. Benchmark analysts maintained a Hold rating on the company, highlighting risks related to remodel openings and external factors like holiday scheduling and wildfires. The company is also refreshing its entertainment offerings, planning to introduce new games to revitalize consumer interest. Investors are closely watching these developments and the company’s upcoming financial results expected in April 2025.
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