Financial Trading Blog
Stock of the day 18/05/2016 – Merlin Entertainment PLC
Having closed 2015 at £4.55, a fairly remarkable feat given it was almost a pound lower back in December, Merlin immediately found itself in trouble as the New Year began. The volatility that enveloped the market at the start of 2016 left very few stocks unscathed and Merlin was no expectation, plunging to £3.79 (its worst price since October) by the beginning of February.
(Source: IT-Finance.com 18/05/2016)
However, Merlin saw a pretty healthy rebound in the back end of February, one capped off by the surge that greeted its full year trading update. Despite a drop in visitor numbers following the rollercoaster crash at Alton Towers last June the company still managed to eke out a £1 million rise in pre-tax profit to £250 million. Resort theme park sales understandably suffered across the year, dropping by 12.4%, but were partially offset by the 8% rise in revenue per reveller at Legoland (with the company outlining its target for 4 new parks by 2020, including the 2016 open of the first in Dubai).
With investors suitably satisfied Merlin Entertainments rose to £4.71 by the start of March, a fraction away from the £4.73 all-time peak struck in May 2015. A relatively steady 6 week period then saw the stock flit between £4.60 and £4.65, only to tumble towards the end of April as the company pleaded guilty to breaching health and safety laws in regards to the Alton Towers crash. Since then the stock’s slide has continued at a fairly gradual pace, leaving Merlin Entertainments at a current trading price of £4.27 (IT-Finance.com, 18/05/2016).
In terms of its first quarter update Merlin will likely be looking to put 2015 behind it, instead focusing on the key upcoming summer period as it tries to coax customers back into its brand-damaged theme parks.
Merlin Entertainments PLC has a consensus rating of ‘Buy’ with an average price target of £4.75.
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