Hollywood Bowl (BOWL) is too cheap considering the ten-pin bowling operator continues to outperform, says Berenberg.
Analyst Owen Shirley retained his ‘buy’ recommendation and target price of 350p on the stock, which was trading 2.2% higher on Monday afternoon at 210p, after profits beat market forecasts in a strong full-year performance.
‘Since its [initial public offering] in 2016, Hollywood Bowl has consistently under-promised and over-delivered on expectations,’ said Shirley.
He upgraded his underlying forecasts on the strength of the trading update but said they are still ‘conservative’ and for a ‘cost base with limited exposure to inflation, and a longer-term opportunity to double in scale’, the stock still looks undervalued.
‘Hollywood Bowl trades at 11.2x [estimated 2023 earnings], 10.1x adjusted for its net cash position, which we think is far too cheap for the growth and resilience on offer,’ said Shirley.
Source: citywire.co.uk