Six Flags Extends Selloff on KeyBanc Downgrade After ‘Indefensible’ Results

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A KeyBanc analyst downgraded shares of Six Flags Entertainment (NYSE:SIX) to Sector Weight from Overweight.

Despite the analyst not liking “reactionary downgrades”, he admits Q2 results were “indefensible”. SIX shares fell over 18% yesterday after delivering Q2 results that showed a drop in theme parks attendance.

“In this tape/macro backdrop, we do not think patience is abundant, and mgmt is likely to be stuck talking into the void until it gets another shot at proving this out next season; and if we’re being honest with ourselves here, the stock feels washed out after today’s move (6.6x our FY23E EBITDA), but we don’t see a compelling story/path forward anymore,” he said in a client note.

The analyst also lowered estimates as SIX “story feels stuck until next year.” He has “waning conviction in SIX’s strategy,” after the Q2 results confirmed “a deeper than expected reset to models, and, in our view, there was not much cohesiveness as to how things actually get better from here.”

SIX shares are down over 50% YTD.