On Friday, Citi has increased its price target for Cedar Fair (NYSE: NYSE:FUN) shares to $54, up from the previous $51, while reiterating its Buy rating on the stock.
The revision follows Cedar Fair's first-quarter performance, which, despite a significant reduction in total operating days, showcased notable growth in attendance and operational expenditures.
The company's early season pass strategy, which offers discounts initially to boost volume and then leans on pricing once a visitor base is established, is reportedly progressing well. This approach has been a focal point for Cedar Fair's management as they navigate the early part of the year.
Citi's revised valuation also looks ahead, considering the 2025 park season. The new $54 price target is based on 8 times the firm's 2025 EBITDA estimates, suggesting a 24% potential upside from current levels.
The analysis does not take into account the potential benefits stemming from the proposed merger of equals between Cedar Fair and Six Flags (NYSE:SIX), which Citi believes could add considerable value.
The merger, if completed, would combine two of the largest amusement park operators in the United States, potentially streamlining operations and creating synergies between the two companies.
The analyst's commentary indicates confidence in the strategic initiatives Cedar Fair is undertaking and the long-term value proposition of the company's stock.
InvestingPro Insights
Following Citi's optimistic update on Cedar Fair (NYSE: FUN), real-time data from InvestingPro provides further context to investors. The company's market capitalization stands at a solid $2.22 billion, and it's trading with a Price-to-Earnings (P/E) ratio of 18.02, which adjusts to a more attractive 14.16 when looking at the last twelve months as of Q1 2024. This suggests that the stock may be more reasonably valued on a historical earnings basis than it appears at first glance.
InvestingPro Tips highlight that analysts have recently lowered their earnings expectations for the upcoming period, which could indicate caution despite the recent positive developments. Additionally, the Relative Strength Index (RSI) suggests that the stock is currently in overbought territory, which typically indicates that a stock may be due for a pullback. However, it's important to note that Cedar Fair has shown a significant return over the last week and is trading near its 52-week high, reflecting strong recent performance and investor confidence. Analysts remain optimistic about the company's profitability in the current year, a sentiment supported by the fact that Cedar Fair has been profitable over the last twelve months.
To delve deeper into Cedar Fair's performance and for more InvestingPro Tips, consider visiting https://www.investing.com/pro/FUN. There are 5 additional tips available, offering comprehensive insights into the stock's prospects. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to get an additional 10% off, providing even greater access to valuable investment analysis and data.
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