Shares of Dave & Buster’s (PLAY) - Get Report rose Tuesday after Deutsche Bank analyst Brian Mullan upgraded the entertainment chain to buy from hold and lifted his share-price target to $28 from $18.
That new target is a Wall Street high, according to Bloomberg.
Dave & Buster’s shares recently traded at $19.10, up 1.3%. They have dropped 52% year to date.
Mullan sees the company rebounding from the woes inflicted by the coronavirus pandemic, which saw stores close as people stayed home.
The next key milestone for Dave & Buster’s is to reach weekly same-store sales levels that “equate to neutral to positive cash flow generation at the open stores,” he wrote in a report cited by Bloomberg.
On Thursday, the company plans to report earnings for the fiscal 2021 second quarter ended Aug. 2. If it can reach that milestone in the earnings report, investors will “extrapolate this result to the remaining stores across the portfolio that have yet to open,” Mullan said.
But he’s “mindful that disappointing results on this front could increase the market’s concern over the need for a potential additional capital raise” this year.
In June, SunTrust analyst Jake Bartlett upgraded Dave & Buster's to buy from hold. He was motivated by the dining and entertainment venue operator's reopening plans as it looked to emerge from the coronavirus pandemic shutdown.
Bartlett said he was encouraged by faster-than-expected reopening plans, steadily improving sales at reopened stores, and the company's new and "extremely flexible" operating model that can drive incremental profits at low volumes with potential long-term savings.