Six Flags Entertainment (FUN) PT Lowered to $28 at Guggenheim

Guggenheim analyst Curry Baker lowered the price target on Six Flags Entertainment (NYSE: FUN) to $28.00 (from $33.00) while maintaining a Buy rating.

The analyst commented: "We are updating our model to account for softer overall 2Q trends (ex divestitures we now forecast attendance at 13.77mm, or +4.4%, compared to 14.19mm prior, +7.6%, against historically easy weather comps). Our 2Q revenue and adjusted EBITDA outlook are $914mm (down from $939mm) and $288mm (down from $315mm), respectively. We have also modestly ticked down our 3Q outlook on a hot start to July and air quality issues from the Canadian wildfires. FUN has made significant progress on the asset portfolio including: 1) selling seven parks to EPR Properties, 2) entering into a purchase agreement to sell the property in Prince George County, MD, and 3) continuing to look to monetize land outside of Richmond, VA. We think the company has the opportunity to focus on six key areas: 1) Optimize the portfolio, 2) Focus CAPEX on targeted investments that drive the highest ROI in parks that have the most potential, 3) Continue to rationalize the cost structure across the business, 4) Maximize value of assets currently for sale, 5) Enhance the guest experience wherever possible, and 6) Focus on reducing leverage. While progress is being made this year, we believe the path to delever and fully turn the portfolio around remains a multi-year effort. Our PT moves to $28 from $33 on our lower EBITDA forecast."

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