Zacks Research Upgrades Dave & Buster’s Rating Amid Market Changes

Analysts at Zacks Research have upgraded the rating for Dave & Buster’s Entertainment (NASDAQ: PLAY) from a “strong sell” to a “hold” in a report issued to clients on December 7, 2023. This adjustment reflects a broader reassessment of the company’s stock, as several other investment firms have also recently issued evaluations regarding the performance of the popular dining and entertainment chain.

UBS Group maintained a “neutral” rating while setting a price target of $20.00 for Dave & Buster’s shares. This was followed by BMO Capital Markets, which lowered its target price from $35.00 to $30.00 while still assigning an “outperform” rating. Meanwhile, Truist Financial raised its price target from $22.00 to $23.00 and advised a “hold” rating. Benchmark also reaffirmed a “hold” rating in their recent assessment.

As of now, two analysts have rated the stock as a buy, five have given it a hold rating, and one has issued a sell rating. According to data from MarketBeat.com, the consensus rating for Dave & Buster’s is “hold,” with an average target price set at $23.80.

Recent Earnings Results and Market Response

On December 9, 2023, Dave & Buster’s reported its latest earnings results, revealing a loss of $1.22 earnings per share (EPS) for the quarter. This figure fell short of analysts’ expectations, which had predicted a loss of $1.16 per share. The company’s revenue for the quarter reached $448.20 million, significantly below the forecast of $460.66 million. Comparing year-over-year results, revenue declined by 1.1%, and the company noted a net margin of just 0.01% alongside a return on equity of 19.13%.

The previous year, during the same quarter, Dave & Buster’s reported an EPS of ($0.45). Analysts forecast that the company will post an EPS of 2.52 for the current fiscal year, indicating expectations for a recovery in the near future.

Institutional Investment Activity

Recent trends in institutional investment reflect shifting dynamics within the company. Notably, Nomura Holdings Inc. significantly increased its stake in Dave & Buster’s by 532.9% during the third quarter, acquiring an additional 2,030,186 shares and bringing its total to 2,411,191 shares valued at approximately $43.79 million.

Additionally, Clearline Capital LP raised its holdings by 20.4%, now owning 1,619,964 shares valued at $29.42 million. Arrowstreet Capital Limited Partnership also expanded its position by 99.9%, acquiring an additional 499,412 shares, thus owning 999,554 shares worth around $30.07 million.

Other notable investment increases include Boston Partners, which raised its stake by 1.9% to own 578,639 shares, and Charles Schwab Investment Management Inc., which boosted its stake by 9.5% to hold 516,835 shares. Currently, approximately 91.45% of Dave & Buster’s stock is held by institutional investors.

Company Overview

Dave & Buster’s Entertainment, Inc. operates a chain of entertainment and dining venues that cater to both adults and families. Its establishments offer a diverse menu featuring entrees and appetizers, alongside a variety of non-alcoholic and alcoholic beverages. The venues also provide numerous entertainment attractions, including games and live sports viewing.

As analysts continue to monitor the stock’s performance, the recent upgrades and reports reflect a complex landscape for Dave & Buster’s as it navigates challenges and opportunities in the entertainment sector.