UBS sets United Parks Neutral rating, PT at $49

On Wednesday, UBS began coverage on United Parks & Resorts (NYSE:PRKS) with a Neutral stock rating and a price target (PT) of $49.00. The firm's analysis suggests that the company may face challenges ahead, with potential declines in earnings before interest, taxes, depreciation, and amortization (EBITDA) expected for the fiscal year 2025 (FY'25), contrary to the growth anticipated by other market analysts. The company's current EBITDA stands at $807.48 million, with an EV/EBITDA multiple of 10.14x. Unlock deeper insights into United Parks & Resorts' financial health with InvestingPro, which offers exclusive analysis and 10+ additional ProTips.

The UBS report indicates concerns about the ability of United Parks & Resorts to maintain its historical valuation multiples. The firm projects a negative impact on the company's visitation numbers, particularly due to new competition in Florida, estimating a decrease in visitation by 3% to 4% points for FY'25 and around a 1% negative impact for FY'26.

The research also points to difficulties in increasing per capita spending within the parks, which could be exacerbated by a tougher growth environment. While some growth in in-park spending per capita is expected, it may only slightly offset the underlying expense inflation, according to UBS.

UBS contrasts its forecast with the Street's more optimistic view, which expects a two-year EBITDA compound annual growth rate (CAGR) of +3% leading into FY'26. However, UBS estimates are more conservative, projecting EBITDA to be flat or slightly down. This discrepancy could lead to further contraction of the company's multiple compared to its historical average of around 8x enterprise value to EBITDA.

The valuation of United Parks & Resorts by UBS is based on approximately 7 times the projected FY'26 EBITDA, a discount to the historical average. This reflects the firm's cautious stance on the company's near-term financial performance and market position.

In other recent news, Six Flags (NYSE:SIX) Entertainment reported its fourth-quarter earnings, revealing revenue of $687 million and adjusted EBITDA of $209 million, slightly below Guggenheim's estimates. The company also announced its 2025 financial forecast, projecting adjusted EBITDA between $1.08 billion and $1.12 billion, aligning closely with analysts' expectations. Oppenheimer maintained its Outperform rating with a $60 price target, noting Six Flags' 1% revenue growth and a significant expansion in EBITDA margins. Mizuho (NYSE:MFG) Securities adjusted its price target for Six Flags to $49 while maintaining an Outperform rating, citing mixed financial performance and cost-saving measures. Barclays (LON:BARC) initiated coverage with an Overweight rating and a $41 price target, emphasizing the company's capital investments and operational strengths.

Additionally, Six Flags announced the nomination of four new board members, including Sandy Cochran and Michael Colglazier, as part of its strategic initiatives. The nominations follow the voluntary resignation of four current directors and aim to enhance the company's strategic objectives. Analysts from Barclays and Guggenheim highlighted potential growth opportunities and self-help initiatives, such as cost synergies and operational improvements, that could drive future growth. Despite some challenges, including higher operational expenses, analysts generally maintain a positive outlook on Six Flags' potential for growth and shareholder value.

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