KeyBanc Upgrades Six Flags, Says Attendance Trends Better Than Expected

KeyBanc Capital Market's new bullish stance on amusement park company Six Flags Entertainment Corp SIX is based on expectations for attendance trends to come in better than expected in the second quarter.

The Analyst

Brett Andress upgraded Six Flags from Sector Weight to Outperform with a new $62 price target.

The Thesis

KeyBanc's propriety "Key First Look" credit and debit card data suggests attendance trends at Six Flags parks will rise by a total of 8% in the second quarter, Andress said in the Sunday upgrade note. (See his track record here.)

This compares to a prior growth estimate of 4% and the Street's consensus estimate of 6%, the analyst said. 

Breaking down the data into core attendance versus parks that were acquired, the research firm's data suggests "core attendance" growth of 4% which may prove to be conservative, he said. 

Beyond the second quarter, Six Flags will be up against easier weather compares, as last year's weather in the third quarter had an impact of about 500,000 potential guests, Andress said. 

This supports the stock's near-term setup, the analyst said. 

Signs of progress are materializing at the company's parks in China: Six Flags management met with local officials, he said. 

At the very least, Six Flags should offer "directionally favorable commentary" around the status of the parks in these two regions, Andress said.

This should help with the "rock-bottom" sentiment surrounding Six Flags' stock, as success in China could eventually translate to $10 million to $20 million of annualized EBITDA, according to KeyBanc. 

Price Action

Six Flags shares were up 4.57% at $52.06 before the close Monday. 

Related Links:

Six Flags Upgraded By Wedbush On 3 Positive Catalysts

Highlights From Wedbush's Chat With Six Flags