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On Wednesday, Oppenheimer reiterated its Outperform rating on shares of Six Flags (NYSE:SIX) Entertainment (NYSE:FUN) with a steady price target of $60.00. The firm's analysts expect the theme park operator to report robust fourth-quarter results for the period ending December 2024. Six Flags is scheduled to announce its financial performance on February 27, 2025.
The positive outlook is partly based on the company's performance in October, which traditionally brings in 60-65% of the park's attendance and saw a year-over-year increase of 20%. Additionally, December, accounting for 25-30% of attendance, also showed promising results. Attendance during this period is less dependent on rides and weather, and more on shows and seasonal activities like ice skating.
Analysts at Oppenheimer suggest that Six Flags may sell up to 12 of its smaller parks. This strategic move would allow the company to concentrate on its larger parks, which contribute approximately 90% of its EBITDA. The proceeds from these divestitures are expected to be used to reduce the company's debt to a target net leverage of less than 3.5 times its forecasted FY25E EBITDA, from the current level of around 4.3 times.
The report also notes the potential for significant growth at Six Flags. This optimism is driven by the expectation of increased attendance, which could add roughly $250 million in revenues if the park attracts approximately 10 million additional guests. Furthermore, the company could benefit from the continued momentum in ticket pricing, which is anticipated to rise by 3-5% into 2025.
The reiteration of the Outperform rating by Oppenheimer reflects a confidence in Six Flags' strategic initiatives and potential for increased profitability as the company moves forward into the year 2025.
In other recent news, Six Flags Entertainment Corporation has been making strategic moves, with the company reporting third-quarter revenue and EBITDA of $1.348 billion and $583 million, respectively.
Following these results, Jefferies and Guggenheim both maintained a Buy rating on the company, with Guggenheim raising the price target to $55, while Stifel analysts increased the company's price target to $64, reiterating a Buy rating. Amid these developments, Six Flags also announced a $1 billion investment for park enhancements over the next two years, aiming to improve the guest experience at its 42 parks.
The company has been making strategic decisions to consolidate ownership interests in key properties, as highlighted by its decision to exercise an end-of-term purchase option for Six Flags Over Georgia and its associated water park. Despite challenges following the merger with Cedar Fair, Stifel has positioned Six Flags as their top theme park operator pick for 2025, reflecting confidence in the company's management to navigate post-merger complexities.
These recent developments indicate the company's commitment to operational improvement and long-term growth, as reflected by the positive outlooks from analyst firms Jefferies, Guggenheim, and Stifel. The company's strategic decisions and financial results are crucial for investors to understand Six Flags' progress and future plans.
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