SIX - Theme park stocks rally after Six Flags activist pushes for real estate sales

Six Flags Entertainment Corporation ( NYSE: SIX ) soared in Wednesday trading after activist investor Land & Buildings Investment Management pushed the company to sell real estate.

On Wall Street, Jefferies analyst David Katz said the firm agrees that the underlying real estate in 75% of the parks bears a high value and could be sold and leased back. On the valuation side, SIX is noted to trade below its historic EV/EBITDA multiple.

However, Jefferies kept a Hold rating in place on SIX on its view the priorities for management in the immediate term could be more focused on re-establishing trust with customers, employees and the Street.

"Establishing a clear mandate for all levels of management and employees in running the business, including the allocation of capital, both in hard assets and in moving the business forward technologically, would build confidence. Establishing an effective pricing and membership strategy that customers understand and find compelling could make an immediate difference in the efficient maximization of attendance and per caps. Finally, we believe building a firm earnings consensus and arriving at a beat-and-raise earnings cadence would result in higher valuation multiple consistency."

Six Flags jumped 11.04% at the open on Wednesday to jump back over $23 for the first time in almost three weeks. Theme park stocks Cedar Fair ( FUN ) +2.25% and SeaWorld Entertainment ( SEAS ) +2.58% also showed gains.

See details on Land & Building's SIX presentation.

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