JPMorgan Initiates Bowlero Corp at Overweight on ‘Unmatched Scale’
2022.08.30 20:02
JPMorgan Initiates Bowlero Corp (BOWL) at Overweight on ‘Unmatched Scale’
By Sam Boughedda
A JPMorgan analyst said the firm is initiating coverage of Bowlero Corp (NYSE:BOWL) with an Overweight rating and $17 price target in a note on Tuesday.
The analyst explained that starting coverage of the American bowling center operator is based on: “(1) market leadership and scale in the economically-attractive bowling industry, (2) a balanced multi-year financial profile (~10% revenue and EBITDA growth base case) with potential P/L upside, (3) structural model improvement during COVID with tailwinds exiting the pandemic, and (4) experienced, founder-led management (CEO/CFO >20 year tenures).”
The analyst described the company as having an “unmatched scale” in an economically-attractive industry.
“US bowling revenue grew at a +4% CAGR from 2010-19 with +4-5% forecasted multi-year (~$5B US TAM; $11B Global). Bowlero is the largest operator of bowling centers at 8% US unit share (>300 centers), 4x the #2-5 peers combined (2% share), w/independents comprising 90% share (3,500 centers),” he said.
“BOWL has a decade-plus track record of accretive deals (>300 centers), applying a proven operating model to bridge the gap between its center EBITDAR margin (~50%) and the industry average (~20%). Go forward – mgmt considers ~1,500 of the independents ‘high-quality’ targets, w/ ~2/3 of BOWL’s unit growth (300+ centers) to come from acquisitions,” the analyst added.
