DexCom earnings beat by $0.03, revenue topped estimates
On Wednesday, UBS analyst Dennis Geiger revised the price target for Dave & Buster's Entertainment, Inc. (NASDAQ:PLAY), significantly reducing it to $18.00 from the previous $35.00 while keeping a Neutral rating on the stock. The adjustment follows a period where the company's fourth-quarter sales faced challenges due to ongoing macroeconomic headwinds and brand-related missteps.
Interim CEO and Chairman Kevin Sheehan has introduced a "back to basics" approach aimed at rectifying errors from the past few years. This strategy focuses on better planning and execution to drive sales and EBITDA growth, with the company currently generating $462M in EBITDA from $2.13B in revenue. The company has seen improved performance in March and April, which is seen as the beginning of positive results from the new strategy. The expectation is that ongoing improvements will lead to a sustained upturn, especially as year-over-year comparisons become more favorable. InvestingPro data reveals 13 additional key insights about Dave & Buster's financial health and market position.
Despite these initial signs of progress, Geiger suggests caution, indicating that a significant turnaround for Dave & Buster's is still to be proven, particularly in a discretionary spending category that may be impacted by a tough economic climate. The analyst has also adjusted the 2025 estimates to account for the possibility of additional strain due to increasing macroeconomic challenges.
The report acknowledges that Dave & Buster's has the potential for a strong rebound in same-store sales (sss), which could offer substantial benefits to the stock value over time, given the company's high margins, ongoing unit growth, and EBITDA potential. Nonetheless, Geiger believes that the current risk/reward balance is neutral, citing the difficult macro environment and limited visibility into the company's short-term sales trajectory.
In other recent news, Dave & Buster's Entertainment reported its fourth-quarter fiscal 2024 earnings, revealing a miss on both earnings per share (EPS) and revenue expectations. The company announced an adjusted EPS of $0.69, falling short of the forecasted $0.72, and revenue of $534.5 million, below the anticipated $549.05 million. Despite these misses, the company noted signs of improvement in business trends during March and April. Analysts at BMO Capital Markets adjusted their price target for Dave & Buster's shares to $30 from $47, maintaining an Outperform rating, citing an inexpensive valuation. Meanwhile, Piper Sandler reduced their price target to $22 from $33, retaining a Neutral rating, and Raymond (NSE:RYMD) James held a Market Perform rating. Benchmark analysts maintained a Hold rating, expressing caution despite some positive trends. The company's management has been focusing on strategic resets and cost management, while also dealing with broader economic uncertainties.
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