On Friday, B.Riley maintained a positive stance on United Parks & Resorts (NYSE:PRKS), reiterating a Buy rating and a price target of $71. The firm highlighted the company’s recent performance, noting an increase in revenue-based lease payments for its San Diego park. The August 2024 payment showed a 9.5% rise from August 2023, reaching $1.488 million, and a 14.1% increase from August 2019. These figures contribute to a year-to-date (YTD) growth of 2.9% over the previous year and 22.9% higher than the same period in 2019.

Despite a report of slightly lower attendance and total revenues for the June quarter due to challenging weather conditions, analysts believe that improvements in July and August, supported by more favorable weather, could reinforce the view that demand for regional theme parks remains strong. This is despite potential macroeconomic spending pressures.

The firm’s confidence in United Parks & Resorts is further supported by the expectation of a 3.4% year-over-year revenue increase for the third quarter of 2024. This projection takes into account the potential for pent-up demand following a slower start to the summer season. It is also noted that with more parks in operation during peak visitation times, the San Diego park’s influence on overall quarterly results will be less pronounced.

In addition to the revenue growth, United Parks & Resorts has been proactive with its capital management. The company has been purchasing shares under the $500 million repurchase plan authorized earlier in the year, with at least $345 million repurchased year-to-date. This move is seen as a strategic effort to capitalize on the recent pullback in PRKS shares.

The analyst’s outlook remains optimistic, focusing on the company’s ability to drive higher per capita spending and the potential to significantly increase AEBITDA in the coming years, assuming normalized weather and attendance patterns. The reiterated Buy rating and $71 price target reflect this positive expectation for United Parks & Resorts’ financial performance.

In other recent news, United Parks & Resorts has seen a series of significant developments. The company has announced the appointment of Bill Myers as the new Chief Accounting Officer, bringing with him extensive experience from various financial leadership roles.

In financial matters, United Parks & Resorts has expanded its credit facility from $390 million to $700 million, enhancing its financial flexibility. Q2 attendance saw a slight rise to about 6.2 million guests, with projected revenues for the quarter estimated to be between $495 million and $500 million and anticipated net income falling between $87 million and $95 million.

In the realm of analyst ratings, Goldman Sachs downgraded United Parks & Resorts from “Buy” to “Neutral”. However, Truist Securities and B.Riley raised their price targets on the company’s shares.

InvestingPro Insights

Recent data from InvestingPro provides additional context to United Parks & Resorts’ (NYSE:PRKS) financial position and market performance. The company’s market capitalization stands at $2.97 billion, with a price-to-earnings ratio of 13.4, indicating a potentially attractive valuation relative to earnings. This aligns with the analyst’s optimistic outlook and Buy rating.

InvestingPro Tips highlight that management has been aggressively buying back shares, which corroborates the article’s mention of the company’s $500 million repurchase plan. This strategy often signals management’s confidence in the company’s value and future prospects.

Additionally, PRKS has been profitable over the last twelve months, with a revenue of $1.73 billion and an impressive operating income margin of 29.79%. These figures support the analyst’s positive stance on the company’s financial performance and potential for AEBITDA growth.

It’s worth noting that InvestingPro offers 6 additional tips for PRKS, providing investors with a more comprehensive analysis of the company’s financial health and market position.

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