RBC Capital slightly lower lowers target price on Hollywood Bowl

(Sharecast News) - Analysts at RBC Capital Markets slightly lowered their target price on ten-pin bowling centres operator Hollywood Bowl from 420p to 415p on Monday, updating its model following the firm's interim results.

RBC Capital, which said Hollywood Bowl was "picking up the pace of expansion", noted that recent trading had been in line with expectations, with momentum in Canada improving as new greenfield sites continued to perform strongly.

The Canadian bank said five Canadian openings were now expected by the end of FY27, up from two previously, with around 40 further potential locations identified., while te UK pipeline also grew, with three new sites now planned for FY27 and two for FY28.

RBC said the accelerated rollout meant Hollywood Bowl was bringing forward its Canadian target of 35 sites from 2035 to 2032, while still aiming for 95 UK centres by 2035.

However, likeforlike growth in Canada has been softer than expected, and RBC now forecasts 2% LFL growth versus 6% previously, though it also expects the expanding greenfield estate to support midterm improvement. UK LFL expectations remain unchanged at 3%.

RBC also highlighted strong spendpergame trends in both regions, supported by investment in amusements, dynamic pricing and VIP lanes, though it also noted that this was partly offset by weaker volumes.

"We incorporate our expectations for the new capacity growth, softer expectations for Canadian LFL and the new �5m buyback into our forecasts, the net result is a 1% increase to adjusted EBITDA in FY27E and 3% in FY28E," said RBC.

Reporting by Iain Gilbert at Sharecast.com