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Cedar Fair (New York Stock Exchange: FUN) and Six Flags Entertainment Corporation (New York Stock Exchange: SIX) both rose on Wednesday amid a broad rally in leisure stocks on investor optimism that interest rates will fall in 2024.
Theme park stocks also got a boost from Eric Wold, an analyst at B. Riley Securities, who said the closing of the merger between the two companies should unlock significant value not yet reflected in the stock.
Wold noted that the combined company's footprint will help minimize weather and seasonal volatility, as none of the four U.S. geographic regions accounts for more than 30% of combined EBITDA at the park level. “Given the increasing visibility impact that adverse weather conditions can have on attendance, the lower importance of any region (or any park) in pro forma results should help reduce financial volatility,” he noted. Additionally, combined season pass offers are expected to increase visitation levels. In addition to creating a more attractive entertainment option for consumers, Wold and his team see the potential to generate ~$200 million in incremental AEBITDA over the next two to three years, which should help reduce the need for annual increases in prices are passed on to consumers. to offset inflationary pressures.
B Riley raised his price target on Cedar Fair (FUN) to $59 from $52 and raised his PT on Six Flags (SIX) to $35 from $31.
The closing date for Cedar Fair (FUN) and Six Flags (SIX) is expected to be between June 26-30.
Cedar Fair (FUN) Stock Rises 6.92% in late action on Wednesday, and Six Flags (SIX) jumped 6.71%.