Tuesday, Bowlero Corp. (NYSE:BOWL) experienced a revision in its stock outlook by Oppenheimer, with the firm reducing the price target to $15 from the previous $18. This adjustment follows Bowlero's third fiscal quarter earnings for 2024, which did not meet the expected figures. Despite this, the Outperform rating on the stock was maintained.
On Tuesday, Bowlero reported its financial results for the third fiscal quarter of 2024, revealing an EBITDA of $123 million, which fell short of the anticipated $134 million by Oppenheimer and $133 million by the broader market. This shortfall was attributed to various factors including subdued same-store sales (SSS) growth, increased labor costs, and investments in amusements and the Professional Bowlers Association (PBA). Revenue for the quarter came in at $338 million, slightly below the expected $344 million by Oppenheimer and $341 million by the market consensus.
The company's SSS declined by 2% year-over-year, largely due to a weak performance in January, which was negatively impacted by adverse weather conditions during the first three weeks. However, SSS showed improvement in the following months, returning to positive growth in February and March, and recording an approximate 6% year-over-year increase in April.
In light of the weaker than expected third-quarter results, Bowlero's management has set its full-year fiscal 2024 guidance towards the lower end of its previously stated range. The company now expects to achieve sales between $1.14 billion and $1.19 billion, with adjusted EBITDA forecasts ranging from $365 million to $405 million.
Following the earnings release and the updated company guidance, Oppenheimer has adjusted its own forecasts for Bowlero's fiscal years 2024 and 2025. The firm now projects an EBITDA of $366 million for FY24, down from the previous estimate of $381 million, and $419 million for FY25, reduced from the earlier forecast of $430 million.
The new price target of $15 is based on 12.1 times the estimated calendar year 2024 EBITDA and 11.2 times the estimated calendar year 2025 EBITDA, compared to the current valuation multiples of 10.5 and 9.7, respectively. Despite the revised targets, the firm's Outperform rating indicates continued confidence in Bowlero's stock performance.
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