Pinstripes Holdings Inc. (PNST:NYSE) posted a net loss in Q1 of fiscal year 2025 (Q1 FY25) and revised its fiscal guidance for the full year, Oppenheimer analyst Brian Bittner reported in a Sept. 4 research note. Upon the news, Oppenheimer lowered its target price on the company to $5 per share from $6.
"Our model better aligns with management's updated guidance for FY25, which flows through to a reduction to our 2026 estimates," Bittner wrote.
Pinstripes is an Illinois, U.S.-based experiential dining and entertainment brand, combining bistro, bowling, bocce and private event space.
127% gain implied
Oppenheimer's new target price on Pinstripes of $5 per share reflects a 127% return for investors, noted Bittner, given the company is trading now at about $2.20 per share.
Pinstripes remains rated Outperform.
Q1/25 results a mixed bag
Bittner reviewed Pinstripes' financial results for Q1/25, ended July 21, 2024. The company reported a net loss of $3.5 million ($3.5M), lower than versus Oppenheimer's forecasted net gain of $4.4M. Other misses were same-store sales, which were (2.4%) versus Oppenheimer's 1% assumption. Similarly, the venue-level margin was a miss, at 7.2% versus 22.4%.
In contrast, some of Pinstripes results beat Oppenheimer's forecasts. The mature store venue-level margin, for instance, was down 240 basis points to 12.6% but still higher than Oppenheimer's projection, in the negative. General and administrative (G&A) expense was $4.7M versus Oppenheimer's $3.1M estimate.
Revisions to guidance
Pinstripes' management revised a handful of elements of its 2025 fiscal guidance due to intensifying macroeconomic headwinds, reported Bittner. They reduced EBITDA guidance to $8–12M from $19–21M; in comparison, Oppenheimer's original estimate was $17M.
Accordingly, Oppenheimer revised its model to reflect 2025 EBITDA of $5. This is lower than Pinstripes' updated 2025 EBITDA, explained Bittner, "as the implied outlook for restaurant margins appears a tad aggressive, based on our modeling work."
2025 guidance for new venue openings is two versus four previously.
Same-store sales growth for 2025 is now negative low single digit to positive low single digit versus positive low single digit previously. Two factors are driving the same-store sales outlook. They are lower spending on private events, 40% of revenue in Q1/25 and slower dining/play trends, 60% of revenue. As for same-stores sales growth, Oppenheimer lowered its FY25 estimate to -1.1% from 2.5%.
Pinstripes' revised 2025 guidance for general and administrative (G&A) expense is $15M versus $17M before. Mature store venue-level margin is now 17–20% versus 20-22% previously.
"The updated financial outlook also assumes a meaningful improvement in venue-level margins for [the] rest of FY25 as fresh cost savings flow into mature units and newly opened stores showcase healthier profitability metrics," Bittner wrote.
Savings, financing, cash balance
On a positive note, Bittner reported, Pinstripes still expects to save $10M this year with the full run rate starting in Q2/25. This savings is coming from management improving margin assumptions with mature units by 400 basis points in the first four weeks of Q2/25 (margin was down 240 basis points in Q1/25). Another area of savings is in G&A to the tune of $4M, of which $2M is to be realized during this fiscal year.
Subsequent to Q1/25's end, Pinstripes obtained $5M in additional debt financing from Oaktree and Silverview, noted Bittner, thereby improving its liquidity position. Oaktree has the option to provide the company with another $10M in net financing, at its discretion.
Bittner wrote that Oppenheimer's model suggests Pinstripes could end 2025 with about $10M in cash on the balance sheet.
What to watch for
Bittner highlighted events that could boost Pinstripes' share price. The successful openings of new units are meaningful future catalysts in light of the company's plan to almost double its footprint over the next two to three years.
Quarterly earnings reports are other catalysts, as they "could feature updates to forward-looking guidance and could drive changes to estimates," wrote the analyst.
Third, additional disclosure regarding sales, unit growth or EBITDA targets beyond FY25 could positively impact Pinstripes' stock price.
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