Goldman Sachs turned attention to the theme park sector, telling investors it initiated coverage on Cedar Fair LP
With amusement parks riding high on post-COVID demand and considerable growth in admissions and in-park spending, it's a sector ripe for investor scrutiny. Here's what Goldman analyst Lizzie Dove thinks about theme parks.
Cedar Fair LP: Buy rating, $50 price target.
Despite current investor caution around the theme park sector, Dove sees a +5.0% EBITDA CAGR through 2026. She cited Cedar Fair's well-invested park portfolio, stable management team, and high-repeat customer base as key contributors to pricing power.
SeaWorld Entertainment Inc: Buy rating, $75 price target.
SeaWorld's high exposure to the burgeoning Orlando market offers admissions pricing power, while mobile app usage and new park investments could bolster in-park spending per-cap growth, Goldman said. Dove believes ongoing cost-cutting initiatives and growth opportunities from international licensing and domestic resort potential are not being adequately appreciated by investors.
Six Flags Entertainment Corp: Sell rating, $26 price target.
Despite an anticipated easy comp from a 40% attendance decline in 2022, Goldman suggested that consensus may be misjudging per-cap growth in 2023 and the ongoing investment necessary for advertising and new attractions.
Given the cautious investor sentiment with potential recession impacts, parks over-earning, and competition, Dove urges investors to focus on company-specific growth drivers and potential return on invested capital late cycle.
Despite park multiples reflecting a 15-20% discount versus pre-COVID levels, Goldman said the growth opportunity is still intact and warrants a fresh look from investors.
