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On Friday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for Six Flags (NYSE:SIX) Entertainment (NYSE: FUN), reducing the price target from $54.00 to $49.00, while maintaining an Outperform rating on the company’s stock. Currently trading at $37.13, the stock has seen significant volatility, with InvestingPro data showing a 23% decline year-to-date. The firm’s analysis acknowledges the mixed financial performance of the theme park operator’s legacy businesses, which aligns with InvestingPro’s Fair Value assessment indicating the stock is currently fairly valued.
Six Flags Entertainment, under its legacy FUN brand, reported an EBITDA of $875.3 million for the fiscal year 2024. This figure includes a $319 million contribution from the legacy Six Flags segment and $556 million from the legacy FUN operations. According to InvestingPro data, the company’s current EBITDA stands at $807.48 million, with a concerning current ratio of 0.43, indicating potential liquidity challenges. This represents a 5.5% year-over-year growth in EBITDA for legacy FUN, up from $527 million in the previous year, indicating a 101% revenue to EBITDA flow-through.
The analysis by Mizuho also highlights that Six Flags identified $35 million in cost savings for the legacy FUN segment. Without these savings, the EBITDA for this segment would have been flat or possibly declined, suggesting that growth was not solely driven by operational performance but also by cost-cutting measures.
In contrast, the legacy Six Flags segment experienced a decrease in EBITDA, with the figure dropping by 6.7% to $430 million in fiscal year 2024. This decline has been consistent throughout the year. Furthermore, the company indicated that it achieved approximately $15 million in cost savings for the legacy Six Flags segment. When these savings are considered, the underlying business would have seen a more significant decrease of around 10%.
Mizuho’s revised price target reflects the firm’s assessment of Six Flags’ financial health and future prospects, taking into account the performance of both legacy segments and the impact of cost-saving initiatives. Despite the lowered price target, the Outperform rating suggests that the firm still sees potential for the stock to perform well relative to the market. This optimism is supported by InvestingPro data showing expected sales growth and net income improvement this year. For deeper insights into Six Flags’ financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 8 additional key ProTips for informed decision-making.
In other recent news, Six Flags Entertainment reported its fourth-quarter earnings with revenue reaching $687 million and modified EBITDA at $209 million, slightly missing Guggenheim’s expectations. The company projects its adjusted EBITDA for 2025 to be between $1.08 billion and $1.12 billion, aligning closely with Guggenheim’s estimate. Meanwhile, Barclays (LON:BARC) initiated coverage on Six Flags with an Overweight rating, citing the company’s consistent capital investments and potential for growth through self-help opportunities. Guggenheim revised its price target for Six Flags to $50, maintaining a Buy rating, while Oppenheimer reiterated its Outperform rating with a $60 price target, noting a 1% year-over-year growth in revenue and an expansion in adjusted EBITDA margins.
In corporate governance, Six Flags announced the nomination of four new board members, with the election set for the 2025 Annual Meeting of Stockholders. The company also scheduled its 2025 Annual Meeting for June 25, providing specific deadlines for stockholder proposals and director nominations. These developments follow the company’s strategic initiatives aimed at enhancing shareholder value and driving profitable growth. New leadership appointments, including CEO Wendy Barnes and CFO Chris McGinnis, are seen as strategic moves to focus on branded growth. These recent developments reflect Six Flags’ ongoing efforts to strengthen its market position and operational efficiency.
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