BofA On SeaWorld: 'Ahoy, Captain'

In a report published Tuesday, BofA Merrill Lynch analysts maintained a Neutral rating on

, while raising the price objective to $22. SeaWorld Entertainment has announced the appointment of Joel Manby as its new CEO effective April 7. Manby brings with him 12 years of theme park leadership experience. The analysts expect the company to provide "any tangible updates" on any strategic shifts triggered by his arrival during the company's 2Q15 earnings call in August. The company's 1Q15 results are expected to show modestly improved admission trends with destination parks such as SeaWorld San Diego potentially positioned to lap last year's challenging comps. "Sequentially improved attendance trends, easing comps, promotional activities and meaningfully higher marketing expense and initial restructuring benefits are expected to drive SeaWorld Entertainment's performance," the analysts stated. The EPS estimate for 1Q15 has been raised from $0.39 to $0.60. The analysts expect the company to focus over the next 2-4 quarters on the "the realization of $50mn in cost saves to fund marketing + capex and a sustainable turnaround, the commencement of meaningful share buybacks and possible int'l expansion." SeaWorld Entertainment is currently facing headwinds from competition and challenging headlines with respect to recent proposed legislation in CA. "Although management is undertaking aggressive cost-cutting to fund new growth initiatives (incl. international expansion plans) and buybacks, in the absence of a tangible core top-line turnaround and rising capital intensity, we believe share price appreciation potential will be limited for the foreseeable future," the report mentioned.