Hollywood Bowl has been impressing investors as analysts at German bank Berenberg raised their target price for the ten pin bowling centre operator by almost ten percent last week.
The analysts said there was a “strikingly obvious upside” to the stock as sales at the operator came in at a rate well head of 2019 levels. The investment bank highlighted that if the company can maintain the momentum, its earnings upgrades this year will be “enormous”. In fact, Berenberg analysts believe Hollywood Bowl investors can’t lose, with a worst-case scenario being that the stock merely meets its estimates and delivers “nice growth” as shareholders have a strong pipeline of new openings to look forward to.
“Based on the trading statement’s guidance for the year-end net cash position, we estimate that Hollywood generated EBITDA in H2 2021 of over £20.0m, which is significantly more than it did in H2 2019 (£17m), despite being closed for the first six weeks of H2 2021. This demonstrates the strength of operational gearing at play,” concluded Berenberg.
As well as new openings, Hollywood Bowl has also been conducting refurbishments at several of its locations, with its Stevenage venue the latest to receive a makeover at a cost of £400,000.