On Tuesday, Stifel adjusted its financial outlook for Bowlero Corp. (NYSE:BOWL), reducing the price target to $19 from the previous $21, while retaining a Buy rating on the company's stock. The adjustment follows an investor field trip that provided Stifel with direct insights into Bowlero's operations and management perspectives.
During the visit to South Florida locations—including Lucky Strike Miami, Bowlero Dania Beach, and AMF Pembroke Pines—Stifel gathered information indicating that core business trends for Bowlero remain healthy and stable. Despite observing some softness in the lower to middle tier customer demographics towards the end of last year, these segments have since shown signs of stabilization.
The firm's revised financial projections take into account the impact of severe weather conditions experienced in January, which negatively affected Bowlero's business. Stifel notes that while February and March showed recovery, the positive performance in these months is not expected to fully compensate for the downturn in January.
Despite the setback, Stifel anticipates that Bowlero will achieve its full-year FY24 EBITDA guidance, albeit likely at the lower end of the forecast range. The firm's expectations for FY25 and FY26 EBITDA remain largely unchanged. The new price target of $19 is based on a 12x multiple of the estimated 2025 EBITDA, reflecting Stifel's updated earnings estimates for Bowlero.
InvestingPro Insights
As Bowlero Corp (NYSE:BOWL) navigates through its fiscal year, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. With a market capitalization of $1.75 billion and a forward P/E ratio that has adjusted to 27.93, Bowlero exhibits a significant valuation in the entertainment and leisure industry. The company's revenue growth over the last twelve months as of Q2 2024 stands at 5.74%, indicating a steady increase in its business operations.
InvestingPro Tips suggest that while Bowlero operates with a significant debt burden, management's strategy of aggressive share buybacks may reflect confidence in the company's future. Moreover, analysts have revised their earnings downwards for the upcoming period, which investors should consider when evaluating the company's prospects. However, with a PEG ratio of 0.24, there might be an expectation of future earnings growth that could be appealing to growth-oriented investors. It's also noteworthy that Bowlero has been profitable over the last twelve months and analysts predict the company will remain profitable this year. For investors seeking more insights, there are additional InvestingPro Tips available for Bowlero, which can be accessed with a subscription that comes with an extra 10% off using the coupon code PRONEWS24.
With the next earnings date on May 8, 2024, and a fair value estimate by analysts at $18, compared to InvestingPro's fair value of $8.86, investors are presented with contrasting perspectives on the company's valuation. Keeping an eye on these metrics, along with the insights from Stifel's report, can help investors make more informed decisions regarding Bowlero's stock.
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