On Friday, Stifel resumed coverage on Six Flags (NYSE:SIX) Entertainment Corporation (NYSE: FUN) shares, following the completion of its merger with Cedar Fair (NYSE:FUN) Entertainment. The firm has issued a Buy rating for the combined entity, with a revised price target of $68, an increase from the previous target of $53.
The new price target represents approximately a 30% upside from the stock's current trading levels. This valuation is based on 9 times the firm's projected 2026 EBITDA for Six Flags.
The merger between Six Flags Entertainment and Cedar Fair Entertainment, which was finalized on July 1, 2024, has led to the coverage of the newly formed company by Stifel.
Stifel is optimistic about the prospects of the merged company, citing potential for significant growth at the legacy Six Flags parks. The firm anticipates that the "conservative" management team of the new Six Flags will swiftly take action to increase attendance at parks that had previously suffered due to aggressive pricing strategies.
While there may be some immediate pressure on admission per capita, Stifel advises investors to focus on the long-term EBITDA growth opportunities rather than short-term metrics. The firm's outlook suggests confidence in the new management's ability to revitalize the performance of the parks and deliver value to shareholders.
In other recent news, Cedar Fair and Six Flags Entertainment Corporation have completed their merger, creating a larger amusement park company under the Six Flags name.
Truist Securities resumed coverage on Cedar Fair with a Buy rating and a price target of $62.00, indicating a potential upside of over 20% to Cedar Fair's current share price. Analysts have highlighted the company's pro-forma profit and loss statement, which includes over $1.2 billion in adjusted EBITDA including synergies from the merger.
Following the merger, significant leadership changes have been announced with Selim Bassoul appointed as the Executive Chairman of the Board of Directors. Cedar Fair also reported robust net revenues of $102 million, attributed to higher season pass sales and favorable weather conditions. A consent payment date has been set for note holders of the company's senior notes due in 2025, 2027, 2029, and 2028, in connection with the merger.
Several firms, including Oppenheimer, B.Riley, Deutsche Bank (ETR:DBKGn), Citi, and Stifel, have maintained Buy ratings on Cedar Fair's stock and adjusted their price targets upwards, reflecting confidence in the company's strategic positioning and the expected financial benefits from the merger. These recent developments highlight the evolving landscape of the amusement park industry.
InvestingPro Insights
As Six Flags Entertainment Corporation (NYSE: FUN) embarks on a new chapter following its merger with Cedar Fair Entertainment, real-time metrics and analysis from InvestingPro provide additional context for investors. With a market cap of $2.67 billion and a price-to-earnings (P/E) ratio of 21.04, the company is trading at a significant earnings multiple. However, the adjusted P/E ratio for the last twelve months as of Q1 2024 stands higher at 31.63, reflecting market anticipation of future earnings growth.
The company's revenue growth of 0.7% over the last twelve months coupled with a more robust 20.18% quarterly revenue growth signal that analysts' expectations for sales growth in the current year may be on track. Moreover, the stock's significant price uptick of 34.85% over the last six months aligns with the positive sentiment expressed by Stifel's revised price target. The InvestingPro Tips also highlight that analysts predict the company will be profitable this year, supporting the firm's optimistic view.
For investors seeking comprehensive analysis and additional insights, InvestingPro offers over 10 tips for Six Flags Entertainment Corporation, accessible via the dedicated page. Subscribers can utilize the exclusive coupon code PRONEWS24 to receive up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing an even greater value for those looking to deepen their market understanding.
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