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Investing.com - Guggenheim reduced its price target on Six Flags (NYSE:SIX) Entertainment (NYSE:FUN) to $48.00 from $50.00 on Tuesday, while maintaining a Buy rating on the stock. Currently trading at $31.07, the stock sits well below the analyst consensus range of $33-$60, having declined nearly 34% over the past six months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.
The price target adjustment reflects weather challenges that impacted Six Flags parks throughout much of the second quarter. According to Guggenheim, the company faced weather headwinds in April, May, and early June, including during the crucial Memorial Day period, which likely affected the pace of season pass sales. Despite these challenges, InvestingPro data shows analysts expect significant sales growth of 24% this year, though the company currently operates with a significant debt burden.
As a result of these weather-related challenges, Guggenheim lowered its second-quarter revenue forecast to $1.045 billion from $1.072 billion previously, and reduced its EBITDA projection to $383 million from $408 million.
The firm now projects full-year EBITDA of $1.081 billion for Six Flags, positioning the company at the low end of management’s guidance range of $1.08 billion to $1.12 billion. Guggenheim noted that July and late September theoretically present easier year-over-year weather comparisons.
Guggenheim identified several key execution initiatives for Six Flags, including enhancing guest experience, achieving cost synergies for margin expansion, implementing disciplined park investment to maximize free cash flow efficiency, integrating technology systems, and reducing net leverage. InvestingPro analysis reveals additional insights about the company’s financial health, with multiple ProTips available to subscribers, including expectations for profitability this year despite recent challenges. Get the complete analysis and detailed Pro Research Report, along with real-time updates and expert insights, with an InvestingPro subscription.
In other recent news, Six Flags Entertainment has been navigating a series of financial and operational developments. S&P Global Ratings revised its outlook on Six Flags to negative from stable, citing weaker-than-anticipated operating performance and delayed debt reduction. The company has faced challenges, including weather-related disruptions and elevated costs, impacting its attendance and revenue forecasts. Despite these hurdles, Six Flags plans to invest $1 billion in capital spending across its parks between 2025 and 2026.
Investment firms have weighed in with their perspectives on Six Flags’ prospects. Oppenheimer maintained its Outperform rating, acknowledging the weather challenges but expressing confidence in the company’s long-term strategy. UBS also maintained a Buy rating, noting a steady price target of $49 and expressing optimism about the company’s visitation targets and in-park spending. Meanwhile, Stifel raised its price target for Six Flags to $50, maintaining a Buy rating and expressing trust in the company’s conservative financial goals for 2028.
Six Flags’ management remains committed to improving guest experiences and achieving financial targets, despite the operational challenges. The company aims to achieve $1.5 billion in adjusted EBITDA and $600 million in free cash flow by 2028, with expectations of increased attendance and spending. Analysts have noted that these targets are seen as conservative, reflecting a balanced view of the company’s potential and challenges.
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