Six Flags Now A Buy, FBR Says

Six Flags Entertainment Corp (NYSE: SIX) has launched new virtual reality technology for its roller coasters in three parks, early reactions to which, both in terms of media coverage and visitor reaction, is larger than what is typically seen for new roller coasters.

FBR’s Barton Crockett upgraded the rating on the company to Outperform, while raising the price target from $58 to $64.

The VR Impact

Crockett believes that the company “which already had very solid momentum” is now potentially receiving “an unexpected, financially material, and thematically helpful first-mover EBITDA and attendance lift from its industry-leading effort to implement new virtual reality technology.”

Early reactions to virtual reality (VR) “reflects the novelty and enjoyable nature of the experience,” and the company intends to expand VR for coasters to nine parks by May/June.

EBITDA Push

The analyst believes that Six Flags might be able beat the consensus expectations and achieve close to $600 million in modified EBITDA, almost 12 months ahead of its goal.

Crockett believes that if the popularity of VR is similar to that of a new coaster, it could potentially drive an over 5 percent increase in EBITDA and 2 percent increase in attendance.