Dave & Buster’s: Stabilizing Sales but Persistent Margin Headwinds Support a Hold Rating

William Blair analyst Sharon Zackfia has maintained their neutral stance on PLAY stock, giving a Hold rating on March 26.

Sharon Zackfia has given his Hold rating due to a combination of factors, including recent signs that Dave & Buster’s business is stabilizing after a prolonged stretch of negative comparable sales. While the company’s latest quarter fell short of revenue and profit forecasts and overall comps remained negative, underlying trends improved when adjusting for severe winter weather, and core concept comps even approached flat to slightly positive levels early in the new year.

At the same time, the mix shift toward food and beverage, which is growing on the back of a refreshed menu and stronger combo offers, is pressuring margins because higher‑margin entertainment revenue is still declining at a mid‑teens rate. Management’s strategy to revive the entertainment side through a slate of new games could help, but its ultimate impact is unclear, leaving near‑term profitability constrained even as modest revenue and EBITDA growth are expected. Given this blend of improving sales momentum but unresolved margin headwinds and execution risk, Zackfia views the risk‑reward as balanced, supporting a Hold rather than a more decisive rating change.

In another report released on March 26, UBS also assigned a Hold rating to the stock with a $13.00 price target.