United Parks & Resorts' (PRKS) lower Q3 revenue has raised concerns over the company's exposure to headwinds related to cyclical consumer health and competition in the leisure sector, Morgan Stanley said in a Friday note.
The company reported Q3 earnings Thursday of $1.61 per diluted share, down from $2.08 a year earlier, as revenue fell to $511.9 million from $545.9 million.
Morgan Stanley said United Parks & Resorts' revenue has been flat to lower year over year since 2022, with its revenue challenges highlighting limited pricing power and consumers' shrinking leisure budget.
The company's operating leverage will also be limited if its revenue growth does not accelerate, the investment firm added.
Morgan Stanley cut its Q4 attendance forecast for United Parks & Resorts to a 1% growth year on year, from its previous forecast of a 2% growth, and lowered its estimates for 2026 and 2027 adjusted earnings before interest, taxes, depreciation, and amortization.
Morgan Stanley also lowered its price target on United Parks & Resorts stock to $37 from $50, while maintaining its equal-weight rating.
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