Wedbush Likes Seaworld's Value, Doesn't Like Its Competition And 'Blackfish Overhang'

In a report published Friday, Wedbush analysts initiated coverage of

with a Neutral rating and $22 price target. The company has been facing negative press regarding its core orca attraction ever since the IPO two years ago. The movie "Blackfish" led to a growing campaign against SeaWorld's treatment of its animals. Although this might be mostly unfair, it has had a "devastating" impact on the stock performance. "[W]hile SEAS is mounting an informational campaign to counter its detractors, the lack of rationality in this debate makes it a difficult problem to eliminate," the analysts stated. The analysts also expressed their concern regarding the two biggest competitors for SeaWorld,

and Universal Studios. "While we argue that SeaWorld provides a distinct form of entertainment vs. these parks, we think the growing supremacy of brands like Frozen, Harry Potter, Marvel, and Star Wars is undeniable, and the resources at the disposal of these two companies is vastly greater than those of SEAS," the analysts said. SeaWorld is attempting to counter the increase in park spending by its competitors with increased investments, which is likely to be only the beginning of a multi-year strategy. For now, the analysts expect the company to see a slow recovery going forward.