UPDATE: Nomura Initiates SeaWorld at Neutral on Valuation

In a report published Wednesday, Nomura analyst Michael Nathanson initiated coverage on SeaWorld (NYSE: SEAS) with a Neutral rating and $37.00 price target.

In the report, Nomura noted, “We are initiating coverage of SeaWorld Entertainment (SEAS) with a Neutral rating and a $37 price target. While we like the fundamentals of the company and industry, we believe valuation—currently at 10.2x 2014E EV/EBITDA and 5.9% 2014E FCF yield—largely reflects our growth estimates. We see better relative value within large cap media. We project SeaWorld revenues should grow at a CAGR of 7% from 2012 to 2015, which is above longer-term historical averages, but more consistent with the high-single-digit growth during 2003-2007. However, the pace of attendance growth could be slightly at risk depending on how aggressive the company is on putting through pricing increases. We are projecting 8% growth in 2013 adj. EBITDA to $450mn (above company guidance of $430-$440mn) and continuing to ramp with 7% growth in 2014 and 8% in 2015.”

SeaWorld Entertainment closed on Tuesday at $37.71.