Analyst Eric Wold of B.Riley Financial reiterated a Buy rating on Bowlero Corp. Class A (BOWL – Research Report), with a price target of $18.00.
Eric Wold’s Buy rating for Bowlero Corp. Class A (BOWL) is influenced by several factors. The recent sale-leaseback transaction for 38 of the company’s bowling centers is a significant factor. The transaction, valued at $432.9M, is viewed as an underappreciated asset that was not factored into the valuation. Moreover, it offers an appealing opportunity to reduce the overall balance sheet leverage and provide growth capital to continue the management’s acquisition strategy. The monetization of this real estate portfolio appears to have become a priority for the management and is expected to alleviate investor concerns about lingering leverage.
The proceeds from the sale-leaseback transaction could meaningfully reduce the leverage ratio, and the capital could aid in the acceleration of the company’s acquisition strategy. The completion of the transaction opens up access to a substantial amount of capital at a more attractive rate. The management’s goal is to increase the frequency of bowling center acquisitions, using these funds to potentially drive the acquisition of ~$60M of bowling center AEBITDA. Confidence in improved same-store sales trends also plays a part in the Buy rating. The reinstatement of midweek promotions has successfully increased traffic and the new bundle offerings are profitably boosting per-person spending, setting a more positive tone for future trends.
According to TipRanks, Wold is an analyst with an average return of -0.8% and a 40.88% success rate. Wold covers the Consumer Cyclical sector, focusing on stocks such as SeaWorld, AMC Entertainment, and Topgolf Callaway Brands.
In another report released on October 12, Roth MKM also initiated coverage with a Buy rating on the stock with a $17.00 price target.
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Bowlero Corp. Class A (BOWL) Company Description:
Isos Acquisition Corp is a blank check company.
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