On Tuesday, Noble Capital maintained its Outperform rating on Bowlero Corp. (NYSE:BOWL) with a steady stock price target of $17.50. The firm's assessment followed Bowlero's third-quarter financial results, which reported a revenue of $337.7 million. This figure closely matched the low-end estimate set by analysts at $337.0 million.
Still, the company's adjusted EBITDA for the quarter was $122.8 million, falling short of the projected $132.5 million by 7.3%. The shortfall was attributed to adverse weather conditions experienced during the initial weeks of January.
Despite the EBITDA miss, Bowlero has shown robust expansion efforts, having added 23 new locations in the fiscal year 2024 to date, with two of these openings occurring in the third quarter. This expansion includes the addition of the Lucky Strike Miami venue.
Moreover, Bowlero plans to introduce four new builds in the forthcoming nine months. In a strategic move to diversify its entertainment offerings, the company also recently acquired Raging Waves, Illinois' largest water park, though the purchase price remains undisclosed.
Noble Capital views the acquisition of Raging Waves positively, considering it a growth opportunity for Bowlero in the out-of-home entertainment sector. The firm's outlook for Bowlero is favorable, as the company's shares are currently trading at 9.1 times the enterprise value to the projected 2024 adjusted EBITDA.
The $17.50 stock price target set by Noble Capital is based on a target multiple of 12.5 times EV/2024 adjusted EBITDA, aligning with the firm's anticipation of long-term double-digit EBITDA growth.
At present, Bowlero's shares are trading at a value that reflects the company's potential for growth in the coming years. The Outperform rating indicates confidence in the company's performance and prospects for future expansion within the entertainment industry.
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