Image source: Dave & Buster's. 

There's a new Wall Street pro waxing positive on Dave & Buster's (PLAY 2.91%). Wells Fargo analyst Jeff Farmer initiated coverage of the chain with a bullish Outperform rating. He's slapping a price target range of $46 to $49 on the stock, suggesting between 16% and 24% of upside off of Tuesday's close.

Farmer's upbeat argument for the "eatertainment" leader is that the stock will justify a larger market premium as comps improve from its pedestrian showing of 1% growth that disappointed investors in its latest quarter. Dave & Buster's multiple should also widen as the high-volume units continue to deliver on what Farmer sees as some of the highest quality unit growth in the industry.

Unlike most eateries, Dave & Buster's relies on food and beverages for less than half of its revenue. It leans on high-margin amusements and corporate events for a little more than half of its business. This naturally props up its bottom line potential. The chain checks in with a net income margin of 8.6% over the past four quarters, according to S&P Global Market Intelligence data. That may not be as high as franchisee-fueled concepts, but it's at the high end for company-owned and operated concepts.

Dave & Buster's stock trades at 20 times Farmer's profit forecast for this year and 17 times next year's estimate. That's not textbook cheap, but it's more than reasonable given the chain's historical growth trends and the unique concept's expansion potential.

Tapping on the "Continue" option

Dave & Buster's was tripped up last month following its weakest quarterly showing -- with revenue climbing 12.4% and comps managing a mere 1% ascent -- since returning as a public company two years ago. However, lost in all of last month's selling was that this was still a stock capable of blowing through analyst profit targets with ease.

The 87-unit chain has managed to beat analyst profit forecasts every single quarterly outing since going public at $16 two years ago.

Q3 2014 ($0.06) ($0.09) 33%
Q4 2014 $0.33 $0.28 18%
Q1 2015 $0.46 $0.37 24%
Q2 2015 $0.40 $0.23 74%
Q3 2015 $0.12 $0.03 300%
Q4 2015 $0.53 $0.43 23%
Q1 2016 $0.72 $0.59 22%
Q2 2016 $0.50 $0.44 14%

Data source: Yahoo! Finance.

Wells Fargo's Farmer isn't the only analyst feeling that last month's post-earnings dip is a buying opportunity. BMO Capital's Andrew Strelzik also reiterated his bullish stance and $48 price target last month, arguing that the video games and other amusements help make it an attractive name in the restaurant sector.

It's hard to bet against the logic of a restaurant stock that doesn't live and die by food commodity costs or mere casual dining trends. The gaming component that makes up more than half of its business and all of its ticker symbol has helped Dave & Buster's beat industry unit-level growth averages for 17 consecutive quarters.

Dave & Buster's still has a long way to go in terms of expansion before it hits its goal of 200 North American locations. Going by the recent price targets put out by Wells Fargo and BMO Capital, one can argue that the stock also has ample room to grow from here.