Raymond James analyst Brian Vaccaro reiterated a Strong Buy rating and $55 per share price target on Dave & Buster's Entertainment (PLAY) in a note to clients Monday ahead of the company's F3Q22 earnings release scheduled for December 6.
Vaccaro said the firm believes the stock is undervalued, while they see the company reporting a solid third quarter and upside in fiscal Q4.
"Expect strong F3Q comps (D&B +15%) and see upside to F4Q consensus sales (RJE $549M vs. consensus $531M). Our analysis of third party traffic data supports our F3Q comp estimate (assumes August spread held for rest of quarter), while QTD trends in November appear to be in a similar range despite lapping more difficult multi-year comparisons (likely helped by return of Eat n' Play promotion)," the analyst wrote.
Raymond James also sees PLAY's adjusted EBITDA margins recovering and exceeding 2019 levels by ~200 bp.
"[We] Believe PLAY remains materially undervalued with a FY23 EV/EBITDA in the mid-5s, which does not seem consistent with the company's strong margin profile (mid-teens EBIT margins) and high single-digit % unit growth exiting the pandemic," the analyst added.
Dave & Buster's shares rose almost 2% in Monday's session. So far, in 2022, the stock is up 2%.
By Sam Boughedda