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Analyst: Investors Can Have The Most Fun With These Theme Park Stocks

Jayson Derrick

The amusement park sector likely emerged from a "difficult" second quarter with momentum from improving trends in July and a "particularly strong" August, Wedbush analysts wrote last week in an industry wide report.

The Analyst

Wedbush analyst James Hardiman rates the following amusement park stocks:

  • Cedar Fair, L.P. (NYSE: FUN) at Outperform, $60 price target.
  • SeaWorld Entertainment Inc (NYSE: SEAS) maintains at Neutral, $28 price target.
  • Six Flags Entertainment Corp (NYSE: SIX) maintains at Outperform, $62 price target.

The Thesis

The theme park industry was negatively impacted by heavy rainfall at many parks but trends improved in the third quarter, Hardiman wrote in a note. Specifically, July was highlighted by some heat waves across Midwest, Northeast and Southwest while August had mostly favorable weather trends across all parks.

Six Flags

A deep-dive into weather patterns shows Six Flags benefited from 3% more good weather days on a weighted average basis quarter-to-date. This could mark a reversal from 2018 when management specifically called out poor weather for resulting in an approximate 4% loss in attendance.

While weather trends across Six Flags location hasn't been favorable in September there is reason enough to "feel good" about quarter-to-date trends.

Cedar Fair

Cedar Fair may have seem flattish good weather days during the third quarter which would mark an improvement over the estimated 4% fewer good weather days in the second quarter, the analyst wrote.

Weather trends "clearly moderated" since the middle of June while same-park attendance likely rose 6% to 7% from June 17 to August 4, the analyst wrote. However, weather patterns moved against the company's favor since Labor Day although this has much less of an impact than if it happened during the peak summer season.

SeaWorld: Consistent Improvement

SeaWorld has seen a 3% more good weather days on a weighted average basis quarter-to-date, the analyst wrote. The improvement was consistent through July, August, and early September.

However, the bigger story for investors is the potential impact from growing competition, and Tuesday's surprise announcement CEO Gustavo Antorcha is stepping down to "disagreements" with the board, the analyst wrote.

Price Action

Shares of Six Flags were trading down 0.48% at $52.00.

Shares of Cedar Fair were up 0.29% at $55.24.

Shares of SeaWorld were trading higher by 2.44% at $27.66.

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