On Monday, B.Riley raised the price target for United Parks & Resorts (NYSE:PRKS) shares to $84 from the previous $75, while reiterating a Buy rating. This adjustment comes as the market anticipates the finalization of the merger between Cedar Fair (NYSE:FUN), L.P. and Six Flags (NYSE:SIX) Entertainment Corporation. United Parks & Resorts has been under the radar, with its stocks increasing approximately 29% since the merger announcement on November 2, compared to the approximately 45% and 58% gains of Cedar Fair and Six Flags, respectively.
The analyst from B.Riley noted that while the shares of United Parks & Resorts have not surged as much as those of Cedar Fair and Six Flags, they have still outperformed the Russell 2000's gain of about 23% during the same timeframe. The firm believes that United Parks & Resorts is undervalued, especially considering the significant operational improvements implemented by its management post-pandemic. These improvements are expected to continue driving increases in both park attendance and per capita spending.
The analyst emphasized that United Parks & Resorts stock is currently trading at an attractive valuation, with an approximately 22% multiple discount to the average pre-merger multiple for Cedar Fair and Six Flags. This presents an investment opportunity, especially when looking ahead to the company's 2025 estimates.
United Parks & Resorts' management has been recognized for driving operational enhancements that have resulted in better performance than pre-pandemic levels. The focus now shifts towards the company's 2025 financial estimates, suggesting a positive outlook for the company's future growth and profitability.
In other recent news, United Parks & Resorts Inc. has seen significant developments. The company's shareholders have elected a new board and ratified KPMG LLP as the independent auditor for the current fiscal year. The company's first-quarter earnings for 2024 surpassed market expectations, leading to a revenue increase of $4 million and a $7 million growth in EBITDA.
Several analyst firms have also adjusted their outlook on the company. Mizuho increased the company's price target to $48, while Citi revised its target to $59, maintaining a neutral rating. Guggenheim initiated coverage with a buy rating and a $73 price target, highlighting the company's strong financial profile and potential growth catalysts.
Furthermore, United Parks & Resorts shareholders approved a $500 million share repurchase program, indicating confidence in the company's financial health. However, Mizuho also expressed concerns about increased competition in the theme park industry.
InvestingPro Insights
The recent price target increase for United Parks & Resorts by B.Riley is underpinned by the company's solid performance metrics and market potential. According to InvestingPro data, United Parks & Resorts boasts a market capitalization of $3.39 billion and a P/E ratio that has adjusted to a more attractive 12.65 over the last twelve months as of Q1 2024. This, coupled with a gross profit margin of 50.9%, highlights the company's ability to maintain profitability in a competitive industry.
InvestingPro Tips suggest caution due to the company's volatile stock price movements and the fact that short term obligations exceed its liquid assets. However, analysts remain optimistic about the company's profitability this year, and it has been profitable over the last twelve months. It's worth noting that United Parks & Resorts does not pay a dividend, which may influence investment decisions for those seeking regular income.
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