Citi is decreasing expectations for theme park Six Flags citing sliding attendance, increased costs and the specter of inflation and a possible recession. The agency on Friday downgraded Six Flags to impartial from purchase and lowered its worth goal for the inventory to $26 from $41. The inventory shed almost 5% in premarket buying and selling Friday and is down almost 45% year-to-date by means of Thursday’s shut. “We are lowering our estimates not only based on troubling visitation data for the month of June but also the increasing likelihood that this is less a one-off anomaly and more likely a response from the SIX customer to higher prices and across-the-board inflationary pressure,” Citi analyst James Hardiman wrote in a Friday word. Citi additionally lowered its worth targets for Cedar Fair to $55 from $67 and SeaWorld to $52 from $62, however maintained rankings of purchase and impartial, respectively. “While we continue to like the theme park industry’s ability to mitigate losses even in the event of a recession, we are beginning to see signs of weakness across the industry, with the month of June particularly problematic,” stated Hardiman. “Given the substantial underperformance of these stocks over the past few months, it is certainly arguable that this deterioration is already priced into these stocks, and yet consensus estimates would seem to suggest significant risk to numbers headed into 2Q earnings season.” Industrywide foot site visitors appears down for June, in response to the word, significantly at Six Flags which noticed a dip of about 38%. The slowdown in guests occurred even amid climate that has been “almost universally positive” for the theme park. That’s a foul signal, on condition that greater than half of estimated full-year business attendance falls in June, July and August. Given the pattern, Citi lowered its second quarter attendance estimate to only 7.4 million visits, a 30% decline from 2019. In addition, Six Flags modified its ticket pricing technique this yr and pivoted to elevating costs to commerce off attendance for increased ticket yields. “As a result, even though SIX shares have been hit quite hard over the past few months, we are taking a step back from our Buy rating until we have a better indication as to whether or not the new pricing strategy is working as anticipated or whether it is likely to backfire amidst an extremely uncertain consumer environment,” Hardiman wrote.
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