On Thursday, Macquarie resumed coverage on shares of Cedar Fair (NYSE: NYSE:FUN), assigning an Outperform rating and setting a price target of $64.00. The firm's analysis follows the completion of Cedar Fair's merger with Six Flags (NYSE:SIX) Entertainment, creating the largest portfolio of regional theme parks in North America. The combined entity now boasts 27 amusement parks, 15 water parks, and nine resorts.
The merger has resulted in Cedar Fair unitholders and Six Flags shareholders owning approximately 51.2% and 48.8% of the fully diluted share capital, respectively. These ownership percentages are based on exchange ratios of 1x for Cedar Fair unitholders and 0.58x for Six Flags shareholders.
Macquarie anticipates that the merger will yield synergies over the coming years, although it may take time to fully realize these benefits due to factors like consumer cyclicality and weather.
Macquarie's coverage notes that the integration of the two companies will be closely watched, particularly in areas such as gate and in-park product innovation, procurement benefits, and how the combined entity manages weather-related challenges. Despite these potential obstacles, the firm believes that the diversified portfolio of the merged company will be advantageous.
The newly-merged Cedar Fair is poised to establish itself as North America's premier theme park network, leveraging its scale, attractions, and intellectual property. While cost synergies are expected, Macquarie emphasizes that the main focus will be on the revenue-generating capabilities of the combined company, looking for evidence that the merger will create value greater than the sum of the separate entities.
In other recent news, United Parks & Resorts' price target was increased to $68 by Truist Securities due to improving demand trends. Following a merger, Six Flags Entertainment Corporation and Cedar Fair Entertainment have seen a flurry of analyst activity, with Stifel issuing a Buy rating and a revised price target of $68 for the combined entity. Truist Securities resumed coverage on Cedar Fair with a Buy rating and a price target of $62.00, indicating a potential upside of over 20% to Cedar Fair's current share price.
Major executive changes have occurred post-merger, with Selim Bassoul appointed as the Executive Chairman of the Board of Directors of the new Six Flags entity. Cedar Fair, now part of the merged entity, reported robust net revenues of $102 million, attributed to higher season pass sales and favorable weather conditions.
Oppenheimer adjusted its price target for Cedar Fair shares from $49 to $67, reflecting optimism about the potential value of the legacy Six Flags assets under Cedar Fair's management. These are some of the recent developments in the amusement park industry.
InvestingPro Insights
As Cedar Fair (NYSE: FUN) embarks on its new journey post-merger, the company's current financial health and market performance offer valuable insights for investors. According to InvestingPro data, Cedar Fair boasts a market capitalization of $2.67 billion, illustrating its substantial size in the amusement park industry. The firm's P/E ratio stands at 21.9, which, while indicating a high earnings multiple, aligns with investor expectations of future growth, especially considering the recent merger.
InvestingPro Tips highlight that analysts expect Cedar Fair to experience sales growth in the current year, which could be a direct result of the synergies anticipated from the integration with Six Flags Entertainment. Moreover, Cedar Fair has shown a strong return over the last three months, with a 36.16% price total return, signaling robust investor confidence in the company's post-merger prospects.
For investors looking to delve deeper into Cedar Fair's potential, InvestingPro offers additional tips, such as the company's short-term obligations versus liquid assets and its revenue valuation multiple. With these insights, investors can better understand the risks and opportunities presented by Cedar Fair's current financial position. For a more comprehensive analysis, interested parties can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking access to a total of 9 InvestingPro Tips that can further guide investment decisions.
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