Dave & Buster’s Entertainment: Stabilization Amidst Strategic Reevaluation Warrants Hold Rating

Benchmark Co. analyst Mike Hickey has maintained their neutral stance on PLAY stock, giving a Hold rating today.

Mike Hickey’s rating is based on a combination of factors that reflect both positive developments and ongoing challenges for Dave & Buster’s Entertainment. The company’s recent financial results show a stabilization in operations, with sequential improvements in same-store sales since February, attributed to the ‘Back-to-Basics’ strategy. This approach has helped rectify previous strategic errors, leading to stronger performance than industry trends, particularly in April.
However, despite these improvements, the company’s financial performance remains mixed, with a year-over-year decline in revenue and AEBITDA. Additionally, while liquidity is strong, the company carries significant net debt. The ongoing interim leadership and the anticipated appointment of a new CEO suggest that strategic evaluations are still underway, which adds an element of uncertainty. These factors combined lead to a Hold rating, indicating that while there are positive signs, there are also risks and uncertainties that need to be addressed before a more favorable rating can be considered.

In another report released today, UBS also maintained a Hold rating on the stock with a $29.00 price target.