Bowlero shares maintain Buy rating amid strong execution, acquisitions fueling growth

On Tuesday, Bowlero Corp. (NYSE:BOWL) received reaffirmation of its Buy rating and an $18.00 price target from Canaccord Genuity. The firm's decision follows Bowlero's impressive fiscal first quarter 2025 results, which saw the company's revenue and adjusted EBITDA surpass expectations. Bowlero experienced a slight increase in same-store sales, bolstered by contributions from new Lucky Strike centers and a successful first season at Raging Waves water park, now under Bowlero's management.

The company is expanding its entertainment offerings with the recent acquisition of Boomers Parks, which includes a collection of outdoor family entertainment centers and a water park in California and Florida. Bowlero plans to improve the profitability of these new assets through operational enhancements and strategic capital investments. Alongside this expansion, Bowlero has adjusted its fiscal year 2025 revenue guidance, raising the lower end while maintaining its EBITDA forecast.

Bowlero anticipates that its margins will remain approximately the same year-over-year in the second quarter of 2025. However, they expect margins to increase in the third quarter due to the timing of New Year's Eve celebrations moving to the third quarter compared to the second quarter of the previous year. This shift, combined with a minor impact from the water parks during their off-season, is factored into their projections.

Canaccord Genuity remains optimistic about Bowlero's valuation, citing the company's consistent performance and a strong pipeline for growth. The firm also notes that recent enhancements to Bowlero's food and beverage offerings could potentially increase customer spending, providing an additional boost to near-term financial estimates.

In other recent news, Bowlero Corporation has been making significant strides in the bowling industry, reporting a 6.9% rise in same-store sales and a near 20% increase in revenue in its latest quarterly earnings. The company has also projected a four-wall EBITDA of $520 million and consolidated EBITDA over $400 million for fiscal year 2025, indicating a total growth between mid-single-digit to 10%. In line with its growth strategy, Bowlero recently ventured into outdoor family entertainment with the acquisition of Raging Waves, diversifying its portfolio and providing a natural hedge against seasonal weather impacts.

Piper Sandler initiated coverage on Bowlero stock with a Neutral rating, acknowledging the company's significant presence in the U.S. bowling industry and its historical success in expanding through acquisitions. However, the firm expressed a cautious stance due to the company's balance sheet leverage and concerns about the broader U.S. consumer environment.

On the other hand, Canaccord Genuity maintained its Buy rating on Bowlero, highlighting the company's growth strategies, which include refining food and beverage offerings, opening new Lucky Strike entertainment centers, and targeted acquisitions to boost revenue per center.

These recent developments underscore Bowlero's commitment to growth and innovation. The company's robust fiscal performance, strategic acquisitions, and expansion plans in the bowling sector and location-based entertainment industry position it for continued success in the upcoming fiscal year.

InvestingPro Insights

Bowlero Corp.'s recent financial performance and strategic acquisitions have caught the attention of analysts, and InvestingPro data provides additional context to the company's current position. Despite the positive outlook from Canaccord Genuity, InvestingPro Tips reveal that Bowlero "operates with a significant debt burden" and "short-term obligations exceed liquid assets," which investors should consider alongside the company's expansion plans.

On a more positive note, InvestingPro data shows that Bowlero's revenue for the last twelve months as of Q4 2024 stood at $1,154.61 million, with a revenue growth of 9.05% over the same period. This aligns with the company's reported strong fiscal first quarter 2025 results mentioned in the article. Additionally, the operating income margin of 13.21% indicates that Bowlero is managing its operations efficiently despite the challenges.

An InvestingPro Tip suggests that "management has been aggressively buying back shares," which could be seen as a sign of confidence in the company's future prospects. This, coupled with the tip that "net income is expected to grow this year," may provide some reassurance to investors considering the company's current negative EPS of -$0.61.

For those interested in a deeper dive into Bowlero's financial health and future prospects, InvestingPro offers 5 additional tips that could provide valuable insights for investment decisions.

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