Orlando Airport Traffic Signals Potential Trouble For SeaWorld Stock

Shares of SeaWorld Entertainment Inc SEAS have rallied 27 percent since March 17, when the company announced the end of orca breeding and a phase-out of orca shows. Citi’s Jason B Bazinet downgraded the rating for the company from Buy to Neutral, with a price target of $22.

Shift Smart, But Orlando Traffic Falls

The recent ramp in SeaWorld’s shares has changed the risk-reward for the company, analyst Jason Bazinet said. He added, “While we agree with management’s long-term shift, we believe a retrenchment in Orlando airport traffic could offset the benefits from management’s strategy.”

SeaWorld’s plans to end orca breeding and phase out orca shows are part of the company’s attempts to deal with the various issues including Blackfish and higher capital spending by tourist-centric competitors, the analyst believes.

In 2015, Orlando airport traffic was 9-10 percent higher than its six-year average between 2008 and 2014. A retrenchment in Orlando airport traffic could erode SeaWorld’s revenues by $40 million since about two-thirds of SeaWorld Orlando guests are still tourists. Bazinet further wrote, “In effect, the benefits from SeaWorld’s strategic pivot could easily be offset by adverse Orlando airport trends.”