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Investing.com - Oppenheimer has lowered its price target on Six Flags Entertainment (NYSE:FUN) to $40.00 from $60.00 while maintaining an Outperform rating on the stock. The revision comes as the stock has declined over 41% in the past six months, with the current price of $23.66 significantly below its 52-week high of $49.77.
The firm believes that Six Flags’ fiscal year 2025 guidance could prove conservative, noting that consumer spending remains stable and weather conditions have been favorable overall. The company is also expected to benefit from easier comparisons as it laps the impacts of Hurricanes Debbie and Helene from August/September 2024. According to InvestingPro data, the company’s revenue growth forecast for FY2025 stands at 15%, though analysts currently don’t expect profitability this year.
Oppenheimer estimates that Six Flags has recovered more than half of the approximately 580,000 season pass sales it lost due to unfavorable weather conditions in May and June. The only unfavorable weather in the third quarter of 2025 has been the remnants of Hurricane Erin and a Midwest cold snap in August.
The firm has raised its third-quarter 2025 EBITDA estimate to $575 million from $530 million, aligning with the Street’s expectation of $576 million, based on updated cost assumptions. Cost synergies are expected to help improve margins in the second half of 2025. InvestingPro analysis reveals that Six Flags’ last twelve months EBITDA stands at $778.47 million, with a current EV/EBITDA ratio of 10.34x.
Oppenheimer’s new price target of $40 reflects an assumption that Six Flags should trade at 9.4 times fiscal year 2026 estimated EBITDA, which matches the valuation of the legacy Six Flags business in 2023 before the merger announcement. Based on InvestingPro’s Fair Value analysis, the stock currently appears undervalued, with 8 additional ProTips available for subscribers regarding the company’s financial health and market performance.
In other recent news, Six Flags Entertainment has experienced a series of significant developments impacting its financial outlook. The company reported weaker-than-expected second-quarter results, which were influenced by substantial weather disruptions and increased operational costs. These factors contributed to a 9% drop in attendance compared to the previous year, with nearly 20% of operating days affected by adverse weather conditions, including 49 days of complete park closures.
Truist Securities downgraded Six Flags’ stock from Buy to Hold, citing a reduced earnings outlook and lowering the 2025 EBITDA estimate to $873 million from the previously forecasted $1,089 million. Similarly, Morgan Stanley cut its price target for Six Flags to $30, maintaining an Overweight rating, after the company reduced its 2025 EBITDA guidance by 20%. S&P Global Ratings also downgraded Six Flags to ’BB-’ from ’BB’, highlighting continued operational weaknesses and a high leverage ratio expected to persist for the next 18 months.
Despite these challenges, UBS maintained a Buy rating on Six Flags, albeit with a reduced price target of $34, down from $40, acknowledging the impact of weather disruptions and cost management issues. These recent developments reflect ongoing concerns regarding Six Flags’ financial performance and operational challenges.
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