Berenberg ups price target on Ten Entertainment

Berenberg has significantly raised its price target for Ten Entertainment Group, on expectations that the leisure operator is on course for a strong summer post lockdown.

Based on the government’s current roadmap, Aim-listed Ten Entertainment intends to reopen all its bowling centres on 17 May, including its newest site in Manchester.

Upgrading the price target to 325.0p from 220.0p, and reiterating its ‘buy’ rating, Berenberg said: “Despite the obvious challenges over the past year, the company has made progress in accelerating its digital integration strategy and growing its non-bowling offering to drive footfall and improve sales densities.”

The broker argued that trading was likely to be stronger than during the previous summer, when its centres were only able to operate at 50% capacity and underlying sales were down by around 20% - 25% in August and September.

“This year, with the use of lane dividers, centres will be able to reopen at 100% capacity,” Berenberg noted. “We believe centres are likely to benefit from pent-up demand and a boost in staycations as a result of restrictions on international travel.

“The newly introduced app will facilitate booing of additional activities, and the ordering of food and drinks, while a new CRM system should allow Ten Entertainment to target customers and cross-sell its growing range of activities more effectively.”

Berenberg also pointed to growth opportunities going forward. “Management has indicated that, alongside its typical acquisitions, it is interested in pursuing further organic opportunities for smaller format central sites, especially given the increasing number of attractive leases coming to market from fading retailers such as Debenhams.”

As at 1045 GMT, shares in Ten Entertainment were ahead 2% at 245.75p.