Mizuho has initiated coverage on Cedar Fair (NYSE:FUN) with a Buy rating and set a price target of $56.00. The firm's positive stance is influenced by several factors expected to benefit the amusement park company.
The optimism from Mizuho stems from three main drivers. Firstly, there is an anticipated upside to EBITDA due to synergies from the merger between Cedar Fair and Six Flags (NYSE:NYSE:SIX). Secondly, improvements in Cedar Fair's operating strategy are projected to significantly impact earnings.
Lastly, Mizuho foresees potential long-term revenue synergies from shared intellectual property in ride development, which have not been factored into the current synergy guidance.
The merger, which is set to be finalized in the first half of 2024, will result in the combined entity being called Six Flags. Despite the new name, Cedar Fair will remain the surviving entity and continue to trade under the ticker symbol FUN. Post-merger, the company will operate a total of 42 regional theme parks.
Mizuho's coverage initiation and the forthcoming merger highlight a period of transformation for Cedar Fair. The firm's analysis points to a robust future for the company, with strategic business moves expected to enhance its financial performance and market position.
InvestingPro Insights
In light of Mizuho's recent coverage initiation on Cedar Fair (NYSE:FUN), current InvestingPro data provides additional context to the company's financial health and market potential. Cedar Fair's market capitalization stands at approximately $2.1 billion, with a P/E ratio of 16.93. Notably, the company's adjusted P/E ratio for the last twelve months as of Q4 2023 shows a more favorable figure at 13.4. This aligns with analysts' optimism, as indicated by the adjusted P/E ratio's reflection of potential earnings growth.
InvestingPro Tips highlight that analysts have revised their earnings estimates upwards for the upcoming period, which suggests confidence in Cedar Fair's ability to grow its earnings. Additionally, the company is expected to be profitable this year, having been profitable over the last twelve months. This profitability is underscored by a gross profit margin of 43.29% over the same period. Despite a slight revenue decline of 1.03% in the last twelve months as of Q4 2023, the quarterly revenue growth shows a positive turn at 1.4%, hinting at a recovering trajectory.
For investors considering the long-term value of Cedar Fair, it's worth noting that the company's short-term obligations currently exceed its liquid assets, which may warrant further scrutiny. On the brighter side, Cedar Fair's dividend yield stands at 2.92%, with the last dividend ex-date recorded on March 5, 2024, providing a potential income stream for shareholders.
For more in-depth analysis and additional InvestingPro Tips, visit https://www.investing.com/pro/FUN. There are 3 additional tips available on InvestingPro, offering insights that could further inform investment decisions. Use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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