Dave & Buster's Analysts See Upside In 'Challenging Environment' After Q2 Earnings Beat

Shares of Dave & Buster’s Entertainment Inc PLAY climbed in early trading on Wednesday, after the company reported upbeat second-quarter results.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

BMO Capital Markets On Dave & Buster’s Entertainment

Analyst Andrew Strelzik reiterated an Outperform rating, while reducing the price target from $65 to $55.

Dave & Buster’s Entertainment reported its second-quarter EBITDA at $152 million, beating consensus by $11 million, with stronger restaurant margins and lower G&A more than offseting weaker comps, Strelzik said in a note." This marks a return to supporting EBITDA upside despite top-line pressures following last quarter’s missteps," he added.

The company continues to witness pressure on same-store sales, with comps declining 6.3% in the second quarter and "likely similar declines in August owing to the challenging consumer spending environment," the analyst stated. While the top-line is likely to remain softer than was earlier anticipated, the quarterly results "bolster our confidence that PLAY could navigate a challenging environment with cost savings as a bridge to more conducive top-line environment in which its strategic initiatives could better perform," he further wrote.

Check out other analyst stock ratings.

Truist Securities On Dave & Buster’s Entertainment

Analyst Jake Bartlett maintained a Buy rating and price target of $59.

Although Dave & Buster’s Entertainment delivered an earnings beat, its same-store sales declined sharply by 6.3%, versus consensus of a 3.3% downturn, Bartlett said.

"We continue to believe that PLAY’s sales initiatives will begin to offset macro pressures, with a building impact of remodels, a more focused marketing campaign during football season and significant special events sales drivers (pre-bookings already up Y/Y)," the analyst wrote. Although same-store sales are likely to remain under pressure in the near term, the company may be able to "at least partially offset" the impact of this with operating cost efficiencies, he added.

PLAY Price Action: Shares of Dave & Buster’s Entertainment were up 1.5% to $30.37 at the time of publication on Wednesday.

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