Barclays sets United Parks stock at Equalweight, $50 target

On Friday, Barclays (LON:BARC) initiated coverage on United Parks & Resorts (NYSE:PRKS) with an Equalweight rating and set a price target of $50.00. The new coverage by Barclays acknowledges United Parks & Resorts’ strong financial performance, highlighting its effective use of technology-led pricing initiatives that have enhanced revenue per capita and profit margins. The company’s free cash flow (FCF) and aggressive share repurchase program were also noted as positive factors.

The Barclays analyst, while recognizing these strengths, expressed reservations about the long-term growth prospects for United Parks & Resorts, particularly in terms of attendance. Despite the possibility of attendance recovery due to improved weather conditions, the analyst conveyed uncertainty about what other factors could sustainably drive growth in visitor numbers.

United Parks & Resorts is reportedly embarking on a new round of cost savings that could potentially impact the guest experience. This move comes at a time when the company faces increased competitive risks from the opening of Universal’s new Epic theme park.

The analyst’s stance reflects a cautious approach, opting to remain on the sidelines due to concerns over how United Parks & Resorts will navigate the challenges posed by its competitor’s expansion. Comparing the company’s performance with that of its peer, Cedar Fair, L.P. (NYSE:FUN), Barclays suggests waiting to see how the competitive landscape evolves following the launch of the Epic park before taking a more definitive position on United Parks & Resorts’ stock.

In other recent news, United Parks & Resorts reported its fourth-quarter 2024 earnings, revealing mixed results. The company exceeded revenue expectations with $384.4 million, surpassing the forecasted $379.6 million, but missed its earnings per share (EPS) forecast, posting $0.50 against an expected $0.61. Despite the EPS miss, analysts from Guggenheim, Mizuho (NYSE:MFG), Stifel, and JPMorgan adjusted their price targets for United Parks, reflecting a range of opinions on the company’s potential. Guggenheim raised its target to $72 and maintained a Buy rating, while Stifel increased its target to $74, also maintaining a Buy rating. Conversely, Mizuho raised its target to $45 but kept an Underperform rating, and JPMorgan adjusted its target to $63, maintaining a Neutral stance.

The company’s performance was affected by adverse weather conditions, which impacted attendance. Analysts noted that despite these challenges, United Parks’ revenue and EBITDA slightly exceeded some expectations, thanks to factors like increased per capita spending and strategic initiatives. Looking forward, United Parks aims to cut $50 million in costs by 2025 and expects record EBITDA, assuming normal weather conditions. The company plans significant capital investments, including $225 million in capital expenditures, to support future growth. The firm’s strategic initiatives and cost management efforts are seen as pivotal in navigating the competitive and economic landscape.

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