Jefferies analyst David Katz initiated coverage on Six Flags Entertainment Corporation ( FUN ) with a Buy rating and a price target of $59.00.

The analyst writes that the merger of Six Flags and Cedar Fair offers a strong long-term opportunity, with Cedar Fair’s management positioned to unlock significant earnings potential.

Notably, on July 1, legacy Cedar Fair and legacy Six Flags closed the merger transactions to form the new combined company Six Flags Entertainment Corporation ( FUN ).

Katz projects a smooth integration between both companies, as their parks have minimal geographic overlap.

The analyst expects Cedar Fair’s management to unlock the value of Six Flags’ assets and achieve at least $200 million in synergies ($80 million in revenue and $120 million in cost savings) by the end of 2026.

Execution opportunities in technology, labor, marketing, and operations should be easy wins for the new company, which is likely to end 2024 with a 5x net debt/EBITDA ratio, adds the analyst.

The analyst considers the guidance of