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On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on United Parks & Resorts (NYSE:PRKS) by increasing the price target to $45 from the previous $43 while maintaining an Underperform rating on the company’s stock. The adjustment follows United Parks’ recent financial performance, which showed revenues of $384.4 million, surpassing both Mizuho’s projection of $381 million and the consensus estimate of $380.5 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) also exceeded expectations, reaching $144.5 million against Mizuho’s forecast of $141.5 million and the Street’s $138.4 million. The company maintains a healthy gross profit margin of 48.93% and has generated $625.25 million in EBITDA over the last twelve months.
The firm’s analysis pointed out that the revenue increase was driven by attendance figures that matched forecasts, with 4.88 million visitors compared to an anticipated 4.86 million. Additionally, a slight improvement in per capita spending contributed to the performance, with a 0.4% increase over the flat growth expected by Mizuho. This was despite a 2% decline in attendance pricing, which was anticipated, while in-park spending rose by 3.5%, slightly better than expected.
Despite the positive attendance and spending figures, Mizuho highlighted concerns regarding United Parks’ operating costs, which remain elevated year-over-year, even with a lower top line. InvestingPro data shows the company trades at a P/E ratio of 13.63, which appears high relative to its near-term earnings growth potential. Subscribers to InvestingPro can access detailed financial health metrics and additional insights through comprehensive Pro Research Reports, available for over 1,400 US stocks. Weather impacts were noted as a factor affecting attendance, with the suggestion that numbers could have been higher by approximately 150,000 visitors without these effects. The report also acknowledged the company’s mature business stage, despite a history of strong management.
United Parks has set a target to cut $50 million in gross costs in 2025. However, Mizuho expressed skepticism about the incremental benefits of these reductions, noting that a similar cost-cutting target was set for 2024, yet cash operating expenses increased year-over-year against declining revenue. The firm suggested that while the cost cuts are not to be discredited, additional investments may be necessary to drive top-line growth, as was the case in 2024.
In other recent news, United Parks & Resorts reported mixed fourth-quarter 2024 earnings results. The company missed its earnings per share (EPS) forecast, posting $0.50 against an expected $0.61, but exceeded revenue expectations with $384.4 million compared to the forecasted $379.6 million. Stifel analysts have raised the company’s price target to $74, maintaining a Buy rating due to the company’s identified $50 million in cost savings and potential EBITDA growth. JPMorgan also adjusted its price target for United Parks & Resorts to $63, while maintaining a Neutral rating, citing the company’s strong revenue generation and cost management, but noting challenges in the theme park sector. Despite the earnings per share miss, positive forward guidance suggests record EBITDA in 2025, assuming normal weather conditions. The company plans significant capital expenditures, with $225 million allocated for 2025, focusing on core projects and expansion. Analysts from Stifel and JPMorgan express differing views on the company’s prospects, reflecting both optimism in operational execution and caution due to competitive and economic pressures. United Parks & Resorts’ strategic initiatives and new attractions are expected to support future growth, with positive trends in international and group bookings.
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