William Blair analyst Sharon Zackfia has maintained their neutral stance on PLAY stock, giving a Hold rating on August 27.
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Sharon Zackfia’s rating is based on several factors impacting Dave & Buster’s Entertainment’s financial outlook. The company’s sales trends showed signs of weakening during the latter half of the second quarter, leading to projections that fall slightly below consensus expectations for comparable sales and adjusted EBITDA. Revenue growth is anticipated to be modest, with a slight decline in comparable sales, which is worse than earlier in the quarter. This has resulted in expectations of a more significant decline in unit-level margins compared to consensus, driven by negative sales trends and increased costs related to repairs, maintenance, marketing, and new unit occupancy.
Sharon Zackfia also notes that while there was some improvement in sales trends in August, the overall outlook remains cautious, with a projected decline in third-quarter comparable sales. The full-year comparable sales are expected to decline more than consensus estimates. Despite these challenges, there is an expectation for a return to free cash flow generation due to controlled capital expenditures. The new CEO, Tarun Lal, is anticipated to continue with plans to revert to historical marketing strategies, which could positively impact future performance. These mixed signals contribute to the Hold rating, reflecting a wait-and-see approach as the company navigates these challenges.
In another report released on August 27, Truist Financial also maintained a Hold rating on the stock with a $27.00 price target.
Based on the recent corporate insider activity of 60 insiders, corporate insider sentiment is neutral on the stock.