Morgan Stanley is optimistic about regional theme parks and believes two brands specifically have a likelihood to outperform: Cedar Fair and SeaWorld. The Wall Street firm initiated an chubby stock valuation on Thursday. Its $53 Cedar Fair price goal is up nearly 27% from Wednesday’s close, while SeaWorld’s $70 price goal suggests a rise of around 30%. “We consider U.S. regional theme parks take part in a growing industry that advantages from diverse assets, high barriers to entry (i.e., he said, each Cedar Fair and Sea World have underestimated pricing power on account of their attractive relative value at to other entertainment options and the loyalty of growing season pass members, he noted that companies saw revenue growth of 20% to 30% between 2019 and 2022, outpacing improvements in other consumer-related sectors over that point period. This revenue growth got here despite attendance , which has not yet fully recovered from pre-pandemic levels. FUN YTD mountain Cedar Fair results because the starting of the 12 months Wage pressure can be easing, supporting margin growth, Yeh noted. Finally, regional theme park earnings before interest, taxes, depreciation and amortization multipliers are down 15% to twenty% in comparison with pre-Covid-19 levels.By comparison, accommodation multipliers are down 5% to 10% and gaming/cruise multipliers are up 5-10%, he said. Cedar Fair specifically has well-invested real estate and a powerful returning visitor base, a testament to its pricing power, Yeh wrote. “Margins underperformed peers at higher wages, but we see a chance for higher operating leverage as park revenues proceed to grow and spending growth normalises,” he said. SEAS YTD mountain SeaWorld Year-Over Results The overlapping footprint of Disney and Universal, and potential tailwinds from returning international visitors, should boost attendance and per capita spending growth at SeaWorld, Yeh said. “The concentrated revenue footprint increases scaling opportunities as operating cost reduction initiatives proceed, while higher capital expenditures at 23E could unlock long-term growth opportunities,” he wrote. While there are concerns a couple of potential recession, he believes regional theme parks can weather the crisis. “While not proof against broader economic cycles or a possible slowdown in consumer spending, regional theme parks have shown resilience with relatively rapid EBITDA growth in previous cycles in comparison with other consumer sub-sectors and destination parks, benefiting from the regional customer base and relative affordability,” said Jeh . Cedar Fair has seen a rise of just over 2% because the starting of the 12 months, while SeaWorld is little modified. – Michael Bloom of CNBC provided the reports.
Theme parks FUN and SEAS could also be great investment, says Morgan Stanley
