Numis upgrades Merlin Entertainment to 'hold' from 'reduce'
Analysts at Numis upgraded their rating for Merlin Entertainment to ‘hold’ from ‘reduce’, and kept a price target at 400p after the theme park operator reduced profit guidance.
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In an interim update, Merlin said profits in its theme park division would be weighed down by weak demand after an accident caused at its Alton Tower theme park seriously injured four people.
It expected earnings for 2015 at £40-50m, about half its original forecast.
Shares in the theme park company fell 3.97% to 406.30p at 1556 BST.
Despite the profit warning, Numis analyst Ivor Jones said forecasts have now reached a level from which they can recover.
Jones said there is potential for re-establishing momentum for the financial year 2016.
“This is a business with good long-term growth prospects and a management team with an excellent track record,” Jones said in a note to clients.
Shore Capital said the market was expecting numbers to fall and retained a ‘buy’ rating on the stock.
Analyst Martin Brown said Merlin was a multi-year quality growth story.
"The downgrade is larger than we had expected, however we are encouraged by the better trading elsewhere and while not trying to trivialise the tragic events, historically theme parks around the globe have recovered relatively quickly from such events,” Brown said in a note to clients.