Jefferies analyst Andy Barish raised his price targets, for Cheesecake to $60 from $55 and for Dave & Buster's to $60 from $56.
“We are incrementally more positive on the full-service category following the delta/inflation selloff and exuberant consensus forecasts getting reined in,” he wrote in a commentary.
“Positive structural changes related to supply contraction, potential for share gain from independents, a permanent shift toward off-premises/digital service and lasting operational efficiencies create a favorable risk/reward for investors.”
Cheesecake Factory stock recently traded at $48.66, up 3%, and Dave & Buster’s shares at $41.66, up 5%.
Dave & Buster has moved up 23% over the past month while Cheesecake Factory has gained 13%.
“We believe the operating environment for casual dining is better than it has been since maybe coming out of the great financial recession (positive traffic early in cycle),” Barish said.
The current Covid delta-variant concerns "are legitimate but overplayed," he said. And concern about labor-and-commodity costs "has created an opportunity to increase exposure to the sector.”
Regarding Cheesecake Factory: “We believe a dividend return is likely in 2022, as the company's bank amendment is satisfied,” Barish said. “Operating cash flow could approach $300 million next year.”
As for Dave & Buster’s: “With an amazing sales recovery showing strength of brand, PLAY is still reaping the rewards of efficiencies found during the pandemic and driving sales still above 2019 levels,” he said.