2023-03-08 08:10:17 ET
Bowlero ( NYSE: BOWL ) shares rose on Wednesday as Canaccord Genuity analyst Jason Tilchen initiated bullish coverage of the name.
He indicated that the company’s “Buy-and-build strategy” of selectively constructing new centers in desirable locations and acquiring smaller bowling centers and improving margins rapidly. Tilchen noted that the company has shown an ability to expand margins substantially via upgrades, pricing actions, and renovations.
“Bowlero’s experienced management team has developed a highly replicable operating playbook that can double the margins of new centers in the first 90-120 days post-acquisition,” Tilchen told clients. “This is typically followed by more substantial investments, ranging from the installation of an arcade to full-scale renovations, which along with the implementation of Bowlero’s proprietary QMS operating software, drive further improvements on both the top and bottom line.”
He added that the company has been able to cut marketing spend to a negligible level via its partnership with the PBA. Promotion via Barstool Sports is also seen as a tailwind for the company and bowling demand overall.
Tilchen initiated the stock at Buy with a $22 price target. Shares of Bowlero rose 2.8% in premarket trading on Wednesday.
Read the company’s most recent earnings call transcript .
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Bowlero started at Buy a Canaccord applauds ‘buy and build’ strategy