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Analysts Rave About Dave & Buster's Amid Q1 Earnings, 'Jurassic World' VR Launch

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Analysts Rave About Dave & Buster's Amid Q1 Earnings, 'Jurassic World' VR Launch
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Dave & Buster’s Entertainment Inc (NASDAQ: PLAY) may be heading back to the winners circle after reporting a first-quarter earnings and sales beat Monday.  Analysts are particularly excited about the June 14 launch of the virtual reality game "Jurassic World." 

The Analysts 

  • Lynne Collier of Canaccord Genuity maintained a Buy rating on Dave & Buster's and raised the price target from $60 to $65.
  • Brian Vaccaro of Raymond James raised the price target from $52.50 to $60 and reiterated an Outperform rating.
  • Sharon Zackfia of William Blair maintained an Outperform rating.
  • Andrew Strelzik of BMO Capital Markets maintained an Outperform rating and raised the price target from $49 to $64.

The Sell-Side Speaks 

Dave & Buster’s announced that CEO Stephen King will step down Aug. 5 and be replaced by current CFO Brian Jenkins — but analysts remain unfazed about the management shake-up.

BMO's Strelzik said Dave & Buster's continues to be an attractive investment opportunity, and the launch of "Jurassic World" a could contribute significantly to comp growth.

“We are encouraged to see trends begin to stabilize ahead of an increasingly favorable content pipeline, including the launch of virtual reality on June 14 with a second title likely toward the end of the year, as well as the launch of the "Halo" title as a limited-time game in early 3Q,” the analyst said. 

William Blair's Zackfia said she expects a seamless transition with Jenkins taking over as CEO. The launch of a proprietary virtual reality platform represents the single-largest amusement investment in company history, the analyst said. 

“We look to the virtual reality rollout and easing comparisons to continue to bolster the stock as the company executes on its long-term plan to more than double the unit base." 

Raymond James' Vaccaro said Dave & Buster's shares could take a breather in the short term, but the stock holds further positive catalysts in the second half of 2018. They include accelerating sequential comp improvement led by new VR game content; strong new unit performance; and the stock's reasonable valuation, assuming comps continue to stabilize in the second half of 2018, the analyst said. 

Canaccord's Collier said she was pleased that comps sequentially improved ahead of the VR launch, and said the quarter will be the comp low point of the year. Canaccord forecast that comps will increase at least 2 percent after learning that 15 locations will receive two VR rides instead of just one. Dave & Buster's will likely expand the numbers of hours that VR is available, the analyst said. 

Price Action

Dave & Buster's shares were up 16.7 percent at $55.82 at the close Tuesday. 

Related Links:

Dave & Buster's: It's All Fun And Games With Nearly 30% Upside

Dave & Buster's Challenges Persist, But Jefferies Says Its Valuation Can't Be Ignored

The "Jurassic World" VR game. Photo courtesy of The Virtual Reality Co.

Latest Ratings for PLAY

DateFirmActionFromTo
Jun 2018Raymond JamesMaintainsOutperformOutperform
Jun 2018BMO CapitalMaintainsOutperformOutperform
May 2018Maxim GroupMaintainsBuyBuy

View More Analyst Ratings for PLAY
View the Latest Analyst Ratings

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