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Goldman Sachs Initiates Coverage of Theme Park Stocks
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Goldman Sachs Initiates Coverage of Theme Park Stocks

Goldman Sachs has kicked off its coverage of U.S. theme park operators in the run-up to the important summer season. The firm has given a Buy rating to SeaWorld Entertainment (NYSE:SEAS), highlighting its strong position in the Orlando market, which is expected to maintain robust pricing power.

Goldman Sachs analyst Lizzie Dove underscored overlooked elements like SeaWorld’s ongoing cost-cutting measures and growth prospects from international licensing and domestic resort potential. Despite concerns over new competition in Orlando, the current valuation on SEAS offers an appealing entry point, given upward consensus revisions and a typical 1.5X to 2.0X market premium for international licensing deals.

Goldman Sachs has also conferred a Buy rating on Cedar Fair (NYSE:FUN), citing its well-managed park portfolio, consistent management, and high-repeat customer base due to season pass penetration as factors providing pricing power. Goldman also anticipates a de-risking in 2023 due to normalizing expense growth following an above-average uptick.

However, Six Flags Entertainment (NYSE:SIX) was handed a Sell rating due to what Goldman Sachs views as greater uncertainty and execution risk amid the company’s turnaround strategy. This sentiment is linked to the challenge of adjusting pricing and attendance, flawed per cap growth forecasts for ’23, and ongoing investment in advertising and new attractions.

Overall, Wall Street analysts have consensus price targets of $76.88, $50.78, and $32.64 on SEAS, FUN, and SIX stocks, respectively. This implies upside potential of over 38%, 15%, and 30%, as indicated by the graphic above.

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