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Investing.com -- Dave & Buster’s Entertainment Inc. (NASDAQ:PLAY) stock jumped 10% on Wednesday despite the company reporting first quarter results that fell short of analyst estimates.
The entertainment and dining venue operator posted adjusted earnings per share of $0.76 for the quarter ended May 6, missing the consensus estimate of $1.01. Revenue came in at $567.7 million, below expectations of $573.25 million and down 3.5% from $588.1 million in the same period last year.
Comparable store sales decreased 8.3% compared to the first quarter of 2024. The company attributed the decline to "clear mistakes" in marketing, menu, operations and other areas that it is now working to address.
Despite the disappointing results, investors appeared encouraged by improving trends noted by Loop Capital analyst Alton Stump, who reiterated a Buy rating on the stock while raising his target price to $46 from $35.
The company indicated comparable sales improved sequentially over the course of the first quarter, from an 11.9% decline in February to an 8.4% decline in March and a 4.3% decline in April. Furthermore, comparable sales were down just 2.2% to date in the second quarter.
A consolidated operating profit margin of 12.4% in the first quarter was down from 14.5% in the same period last year, while store-level EBIT margin of 28.6% declined from 31.1% a year ago.
Management reiterated its previous guidance for fiscal year 2025, including 10-12 new unit openings and capital expenditure spending of under $220 million.
Other analysts also raised their target prices, including Piper Sandler analyst Brian Mullan and BMO analyst Andrew Strelzik. Mullan maintained a Neutral stock rating on D&B, but raised its price target to $30 from $22, citing the company’s "back to basics" initiatives. Strelzik maintained Outperform, raising his price target to $35 from $30, citing "comps ahead of our expectations and within shouting distance of potentially inflecting positive," also due to Dave & Buster’s "back to basics" strategy.
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