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SeaWorld shares jump on analyst upgrade

The Associated Press

SeaWorld Entertainment Inc. shares rose Tuesday after a Citi Investment Research analyst raised his rating and price target on the water theme park's shares.

Analyst Jason Bazinet upgraded his rating on the company's stock to "Buy" and raised his target price to $40 from $30 on the belief that SeaWorld has a clear pathway to convert to a real estate investment trust in the future.

SeaWorld, which went public in April, has not indicated that it is interested in converting to an REIT. And a company spokesman declined to comment as SeaWorld is scheduled to report its third-quarter results on Wednesday. But Bazinet believes that the Orlando, Fla., company is likely to convert, following in the steps of other theme parks. SeaWorld also currently gets certain tax benefits and when those are exhausted, he believes the tax benefits of an REIT structure may become attractive.

The analyst said that it appears any changes that the Internal Revenue Service is considering to certain rules will not affect SeaWorld's potential conversion to an REIT.

Shares increased 81 cents, a nearly 3 percent increase, to $32.01 by midday amid a broader market dip.