Six Flags Entertainment (FUN) PT Lowered to $44 at Goldman Sachs

Goldman Sachs analyst Lizzie Dove lowered the price target on Six Flags Entertainment (NYSE: FUN) to $44.00 (from $47.00) while maintaining a Neutral rating.

The analyst comments "Bottom line. There was a lot to like with FUN results yesterday, with impressive October trends, long-term guidance which provided a pathway to 35% EBITDA margins over the next 3 years, and a commitment to realize $120mn run-rate synergies by the end of 2025. Indeed, concerns around the reinvestment of synergies have weighed on the stock price in recent months, but management seemed clear that this wouldn't be the case, and it sounded like incremental synergies have been identified. Still, costs were higher than expected this quarter, and the flow through of the impressive 20% attendance growth 4QTD to $200-$215mn EBITDA seems to suggest some reinvestment. In addition, with capex higher in 2025 and 2026, we expect the minimal cash flow generation over the near term ($100-$200mn annually in '25/26 on our numbers) to be a sticking point for investors. All of that being said, we raise our revenue estimates across the board on higher attendance estimates, but our EBITDA nudges down slightly as we take a more conservative view on costs. In our view, there is a clear bull case emerging, particularly with the commentary around potential parks sales, which would accelerate the de-leveraging process. However, we remain on the sidelines as we think it is still too early pending further proof points, and we believe that turning around the legacy Six Flags assets may take longer (and cost a little more) than expected. As such, we reiterate our Neutral rating and lower our price target to $44."

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