Wells Fargo Starts Dave & Buster's (PLAY) at Outperform
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(Updated - October 12, 2016 7:33 AM EDT)
Wells Fargo initiated coverage on Dave & Buster's (NASDAQ: PLAY) with an Outperform rating and a price target of $46-$49. Analyst Jeff Farmer anticipates growth, and he pointed out the company's discount to peers.
"We expect PLAY's valuation discount to the growth restaurant peer group to narrow as: (1) the company continues to deliver some of the highest quality unit growth in the sector & (2) SSS steadily improve as PLAY moves past the peak SSS pressure driven by the confluence of competitive encroachment, cannibalization and energy industry exposure headwinds," said Farmer.
The analyst added, "We expect PLAY to deliver multiple expansion in coming quarters as (1) the company continues to deliver some of the highest quality unit growth in the sector (as measured cash-oncash return, margin performance, and upward EPS revision) and (2) same-store sales (SSS) steadily improve from the 1.0% F2Q16 performance as PLAY moves past the peak SSS pressure, driven by the confluence of competitive encroachment, cannibalization, and energy industry exposure headwinds. Our 2016E and 2017E EPS estimates are $1.94 and $2.27, respectively."
Shares of Dave & Buster's closed at $39.57 yesterday.
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