Stifel Initiates Coverage On Dave & Buster's Entertainment

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Stifel initiated coverage on Dave & Buster’s Entertainment, Inc. PLAY Tuesday with a Buy rating and a $25 price target.

Analyst Paul Westra was bullish because “PLAY is the fastest-growing, highest-comping and highest-returning concept in full-service sector yet PLAY’s ‘growth option’ trades at a 15 peers discount to peers.”

In addition, “consumer’s increasing preference for environment-forward, destination-dining brands and...its strong, operations-focused management team,” were cited as reasons for the rating.

“On a relative valuation basis, PLAY’s ‘$270mm growth option’ is -10 percent below its Peers’ $300mm despite PLAY’s: (a) better 2H14 same-store-sales momentum of +3.5 percent E (vs. Peers’ +2.2  percentE); (b) faster 2015 new-unit growth of +10%E (vs. Peers’ 9 percent E) ; and, most importantly, (c) higher 2014 Returns-on-Equity of +15 percent (vs. Peers +9 percent),” according to the report.

The report concluded that the management team has also performed above peers and has implemented “state-of-the-art management systems and [has a] best-in-class employee-centric culture.”

Dave & Buster’s Entertainment, Inc. recently traded at $20.80, up 3.64 percent.

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PLAYDave & Buster's Entertainment Inc
$16.79-1.24%

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