Dave & Buster's growth will slow as casual dining visits pull back amid high Covid case counts, according to Stifel. Stifel downgraded Dave and Buster's to a hold rating from a buy. The firm also lowered its 12-month price target on the stock to $40 from $58. The new price target is just 4.5% higher than Friday's closing price of $38.28. Visitation trends at casual dining chains like Olive Garden, Texas Roadhouse and Chili's peaked mid-July and have slowed in recent weeks, according to Stifel's analysis of mobile location data. That decline should hit Dave & Buster's, too. "Despite the likelihood of a beat this quarter, we are hesitant to extrapolate this performance into future quarters amidst elevated COVID case counts and worsening trends in mobile location data over the last few weeks," Stifel's Chris O'Cull said in a note Sunday. Shares of Dave and Buster's have outperformed the market this year, up 27.5% compared with the S & P 500's 20.1% rally. Despite the stock's strong performance in 2021, Stifel said future growth will be harder to achieve. "We believe the incremental buyer of the stock at this point will need to underwrite the company's long-term unit growth potential, which we struggle to argue is a compelling thesis," O'Cull said. —CNBC's Michael Bloom contributed reporting.
Signage is displayed in the middle of a air hockey table at a Dave & Buster's Entertainment location in Pelham, New York.
Timothy Fadek | Bloomberg | Getty Images
Dave & Buster's growth will slow as casual dining visits pull back amid high Covid case counts, according to Stifel.