The SeaWorld Turnaround Story Remains Misunderstood

Don't short Shamu.

Shares of SeaWorld Entertainment Inc SEAS will rally as the company executes a five-point turnaround plan, Stifel analyst Steven Wieczynski said in a Tuesday note.

SeaWorld bears point to concerns tied to branding, attendance, cost cuts and competitiveness, Wieczynski said.

“While we fully understand the bears’ concerns, we also don’t believe any of those concerns are overly warranted and believe SEAS management continues to address those challenges head-on.”

Stifel maintains a Buy on SeaWorld with a $23 price target. Even with SeaWorld trading at a 15–25 percent discount to its peers, shares are still worth $24–$29 based on the company’s projected 2018 EBITDA, according to Stifel.

SeaWorld ended its breeding program for captive killer whales in 2016, but remains under pressure from animal rights groups. "Some people love SeaWorld and some people will never like us," CEO Joel Manby told the LA Times last year.

‘Multiple Positive Catalysts’

SeaWorld has announced positive news in recent months, Wiecznyski said: Debt restructuring, the sale of the 21-percent stake owned by Blackstone Group LP BX and the construction of a “Sesame Street” theme park.

The Stifel analyst said the developments haven’t been fully priced into SeaWorld shares.

The company is focusing on pulling guests from a 300-mile radius around its parks and is rolling out a general admission strategic pricing model, Wieczynski said.

Risks to the model behind Stifel’s $23 price target include a short operating season, “animal activist overhang,” bad weather, theme park accidents and a reliance on discretionary spending by consumers, according to Tuesday’s note.

Related links:

Watch SeaWorld: Massive Stake Acquired For 33% Premium

What To Expect From SeaWorld's Expansion Into Abu Dhabi ______ Image Credit: By Fernandafb10 - Own work, CC BY-SA 4.0, via Wikimedia Commons

Posted In: Blackstone GroupJoel ManbyLA TimesSeaWorld EntertainmentSteven WieczynskiStifelAnalyst ColorLong IdeasReiterationTravelAnalyst RatingsTrading IdeasGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.