SIX - Six Flags Cedar Fair and SeaWorld are expected to ride out the economic roller coaster

2023-05-25 10:06:06 ET

KeyBank Capital Markets took up coverage again on the theme park sector on Thursday. The firm said its likes the setup for amusement parks within the broader leisure sector. Amusement parks are said to be well positioned thematically amid the goods to services shift with consumers, despite the intense concerns over consumer spending.

Analyst Robert Aurand noted the amusement park industry has shown resilience during past economic downturns. For investors, valuations for amusement park stocks are observed to have meaningfully contracted relative to the market.

KeyBanc fired off an Overweight rating on Cedar Fair ( NYSE: FUN ) amid a preference for regional operators, who it believes are well positioned to continue benefiting from the consumer spending shift. "We believe FUN offers the cleanest exposure to this theme as a regional pure play, and with valuation depressed see risk/reward as favorable as investors come to better appreciate FUN’ relative stability amid an uncertain macro," updated the firm.

Six Flags Entertainment ( SIX ) also landed an Overweight rating. Following a difficult transition last year, trends are said to be moving in the right direction. "We acknowledge progress may not always be linear, but believe current valuation offers favorable risk/reward given SIX’ outsized earnings growth potential relative to peers, while offering exposure to our favored regional park subsector," read the breakdown.

SeaWorld Entertainment ( SEAS ) was given a Sector Weight rating despite a healthy turnaround. "While we are encouraged by SEAS’ ongoing initiatives, we believe meaningful stock upside hinges on evidence that destination travel demand can continue to grow (i.e., is this summer the peak?), a view we question amid an increased cost environment and uncertain macroeconomic backdrop," warned KeyBanc.

Six Flags ( SIX ) and Cedar Fair ( FUN ) gained around 0.8% in early trading on Thursday, while SeaWorld Entertainment ( SEAS ) added 0.4% .

More on theme parks stocks:

• Six Flags Entertainment: Attendance Drop On Price Increases
• The Future Of Cedar Fair: Why Investors Should Look Beyond Short-Term Fears
• SeaWorld Confronts An Inflation Monster
• Seeking Alpha's Quant Ratings on leisure facilities stocks

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