UPDATE: Goldman Sachs Sees Signs of Rebound at SeaWorld (SEAS), Upgrades to Buy

(Updated - April 27, 2015 9:26 AM EDT)

Goldman Sachs upgraded SeaWorld Entertainment (NYSE: SEAS) from Neutral to Buy with a price target of $26.00 (from $18.00), suggesting potential upside of 25%. Analyst Afua Ahwoi said sentiment was low, and he sees signs of a rebound.

"Our upgrade is predicated on our view that the SeaWorld brand can regain a place in the consumer’s mindset. In other words, we do not think attendance will decline in perpetuity. We also see SEAS as a beneficiary of the positive leisure travel trends that we expect in 2015," siad Ahwoi.

Ahwoi pointed to four factors that could drive SeaWorld shares higher:

"(1) Our analysis shows that the SeaWorld-branded parks improved 200bp sequentially from 3Q14 to 4Q14. (2) After a competitive 2014 in Orlando, we view the new 2015 competitor attractions as relatively benign. Our new analysis also suggests that SeaWorld Orlando’s market share could be bottoming. (3) We see upside to the multiple, as shares have meaningfully underperformed peers since its April 2013 IPO. SEAS’ multiple has contracted 2.5X, in stark contrast to SIX’s and FUN’s multiples which have expanded by about 1X. (4) We have a positive view of new CEO Joel Manby, who took over the reins on April 7, 2015. Following our conversation with Mr. Manby earlier this month, we believe he has a good understanding of the challenges the SeaWorld brand faces."

For an analyst ratings summary and ratings history on SeaWorld Entertainment click here. For more ratings news on SeaWorld Entertainment click here.

Shares of SeaWorld Entertainment closed at $21.49 yesterday.

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