On Monday, Piper Sandler initiated coverage on Bowlero Corp. (NYSE:BOWL) stock with a Neutral rating and set a price target of $12.00. The firm acknowledged Bowlero's significant presence in the U.S. bowling industry and its historical success in expanding through acquisitions. Bowlero is recognized as the leading company in the American bowling sector, which is noted for being the nation's largest participatory sport—a positive aspect of the company's profile.
The analysis by Piper Sandler highlighted Bowlero's strategy of growing its Amusements and Food & Beverage (F&B) segments as a wise move. These sectors are anticipated to continue contributing to the company's success. Bowling currently accounts for approximately 48% of Bowlero's total revenue in Fiscal 2024, with the expectation that the company will further develop its Amusements and F&B businesses.
Despite the positive aspects of Bowlero's business model and growth strategy, Piper Sandler expressed a cautious stance due to the company's balance sheet leverage. Concerns about the broader U.S. consumer environment also played a role in the firm's evaluation. The analyst described the risk-reward balance for Bowlero's stock as relatively even at its current market levels.
The coverage initiation comes at a time when Bowlero has established itself as a dominant player in the bowling industry, leveraging both organic and inorganic growth strategies to maintain its market position. The company's financial health and future performance in light of the current economic climate will be closely watched by investors following this new coverage.
In other recent news, Bowlero Corp has been making significant strides. The company reported a 6.9% rise in same-store sales and a near 20% increase in revenue in its latest quarterly earnings. Bowlero 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%.
Canaccord Genuity maintained its Buy rating on Bowlero, following investor meetings that highlighted the company's growth strategies. These include refining food and beverage offerings, opening new Lucky Strike entertainment centers, and targeted acquisitions to boost revenue per center. Canaccord's analysis suggests that Bowlero's expansion, coupled with mid-single-digit SSS growth, presents an attractive investment opportunity.
Bowlero's recent developments also include the acquisition of Raging Waves, marking the company's venture into outdoor family entertainment. The strategy to acquire additional water parks is seen as a way to diversify Bowlero's portfolio and provide a natural hedge against seasonal weather impacts. The company's liquidity at the end of the quarter was strong, noted at $386 million, including $67 million in cash.
InvestingPro Insights
InvestingPro data and tips offer additional context to Piper Sandler's analysis of Bowlero Corp. (NYSE:BOWL). The company's market capitalization stands at $1.71 billion, reflecting its significant presence in the U.S. bowling industry. Bowlero's revenue growth is noteworthy, with an 18.56% increase in the most recent quarter, aligning with the firm's positive view on the company's expansion strategies.
However, the InvestingPro data reveals some financial challenges that support Piper Sandler's cautious stance. Bowlero's P/E ratio of -18.75 and negative EPS of -$0.61 for the last twelve months indicate profitability issues. This is further emphasized by an InvestingPro Tip noting that the company has not been profitable over the last twelve months.
Another InvestingPro Tip highlights that Bowlero operates with a significant debt burden, which corroborates Piper Sandler's concerns about the company's balance sheet leverage. Despite these challenges, analysts predict that the company will be profitable this year, suggesting potential improvement in financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Bowlero Corp., providing a deeper understanding of the company's financial position and growth prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.