Here's Why This Analyst Remains Bullish On Dave & Buster's Despite Near-Term Comp Hurdles

Raymond James analyst Brian M.Vaccaro reiterated a Strong Buy rating on the shares of Dave & Buster’s Entertainment, Inc. PLAY with a price target of $55 ahead of its Q4 earnings.
PLAY shares are down about 17% since mid-February, which the analyst attributes to the broader risk-off trade and near-term comp concerns as the company begins to lap more difficult comparisons in March/April.
The analyst believes this creates an attractive entry point.
The analyst acknowledges y/y comparable sales could turn negative in the near term as the company laps particularly difficult comparisons over the next few months.
The analyst said that the company’s analyst day could be a positive catalyst as the new team is expected to unveil its D&B revitalization plan and multi-year growth outlook.
If the company provides 2023 guidance, the analyst suspects it could embed flat/slightly positive y/y comparable sales.
The analyst believes PLAY offers a compelling risk/reward from current depressed levels with 50-90% upside under the base/bull cases versus about 30% downside under the bear case.
The analyst thinks the stock’s current valuation seems inconsistent with the company’s strong margin profile and high single digit% unit growth exiting the pandemic.
The analyst said the company weathered the COVID-19 storm sustained by two equity raises and a high-yield note offering, and is generating higher sales/margins versus pre-pandemic levels.
Exiting the pandemic, the company’s new management team is focused on revitalizing/sharpening the D&B brand/ops and re-accelerating unit growth in the high single-digit % range, remarked the analyst.
Price Action: PLAY shares are trading lower by 0.42% at $35.89 on the last check Thursday.

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