Dave & Buster’s Gets Upgrades Following Second-Quarter Loss

Dave & Buster's gets two analyst upgrades following a plunge in fiscal second-quarter sales and earnings as patrons shunned the high-touch entertainment chain.

Dave & Buster's Entertainment  (PLAY) - Get Report received two analyst upgrades on Friday despite a dismal quarter that saw both sales and earnings plunge amid the coronavirus pandemic and its ongoing impact on the high-touch restaurant and entertainment business.

Stifel analyst Chris O'Cull raised his one-year price target on Dave & Buster's to $18 from $15 after the Dallas-based food and entertainment chain posted a fiscal second-quarter loss of $58.6 million, or $1.24 a share, vs. net income of $32.4 million, or 90 cents a share, a year earlier.

Sales plummeted 85% to $50.8 million from $344.6 million a year ago. Analysts polled by FactSet had been expecting per-share earnings of $1.40 on sales of $78.5 million.

Deutsche Bank analyst Brian Mullan raised his price target on Dave & Buster's to $30 from $28 following what he called a “largely positive" earnings call in which management clarified that its stores are "firmly cash flow positive at the unit level."

Both Mullan and O’Cull held their respective ratings - Mullan at a buy, and O’Cull at a hold - amid uncertainty on when and how consumers return to large group gatherings in "high-touch spaces" like Dave & Buster’s.

Both analysts pointed to the company’s reopening of 84 locations as well as improvement in comparable sales through the first week of September as signs the company may have gotten through the worst, with O’Cull in particular noting that adjusted earnings before income, taxes, depreciation and amortization (EBITDA) were slightly better than the forecast.

Dave & Buster’s shares were down 8.77% at $16.44 in trading on Friday. The stock has fallen approximately 60% this year.