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SeaWorld Entertainment Inc Upgraded By Goldman Sachs

Analysts at Goldman Sachs upgraded their stock rating for SeaWorld Entertainment to Buy from Neutral. They perceived signs of rebound for the amusement park.

In a note to investors, Goldman Sachs analysts Afua Ahwoi, Steven Kent, and Lara Fourman said SeaWorld brand could regain market share. The analysts believe that the number of visitors to the amusement park will not decline in perpetuity. They suggested that the SeaWorld will benefit from positive leisure travel trends this year.

Seaworld shares expected to outperform

The analysts identified four factors will help boost the stock price of SeaWorld significantly from its current levels. These factors included the following:

  1. SeaWorld-branded parks improved 200bp sequentially from 3Q14 to 4Q14
  2. The new 2015 competitor attractions as relatively benign in Orlando after a competitive 2014. SeaWorld Orlando’s market share could be bottoming last year based on the Goldman Sach’s latest analysis
  3. The analysts see an upside to SEAS multiple after meaningfully underperformed its peers since its IPO in April 2013
  4. SeaWorld’s new CEO Joel Manby has a good understanding regarding the challenges confronting the company’s brand

According to Ahwoi and his fellow analysts, Mr. Manby is very passionate about SeaWorld. They also noted that he has experience in improving brands. His recent work in the auto industry was notable.

The analysts wrote, “Our upgrade is predicted on our view that SeaWorld brand can regain a place in the consumer’s mindset. In other words, we do not think that attendance will decline in perpetuity. In fact, we would argue that, unlike brands like Harry Potter and Frozen that could become less popular as hardcore fans outgrow them, interest in marine life transcends generations, pop culture and fashion, and such will have longer brand equity.”

SeaWorld stock performance

The shares of SeaWorld are trading $21.36 per share, down by nearly 1% at the time of this writing around 3:29 in the afternoon in New York.

Over the past 52 weeks, the shares of the company traded between $15.11 and $31.46 per share. SeaWorld lost more than 27% of stock value over the past year.

SeaWorld stock performance

SeaWorld was negatively impacted by the film Blackfish, a documentary film about killer whales. The company criticized the film as “scientifically inaccurate and shameful dishonest.” Last year, its CEO Jim Atchison resigned amid the declining number of visitors to the amusement park.

During the fourth quarter of 2014, SeaWorld posted net losses of $0.29 per share as the company suffered a 4% decline in park attendance. It revenue was $264.5 million.