Last month’s tragic roller coaster accident is one of the factors in what Barclays expects will be a ‘muted’ summer for attractions firm Merlin Entertainments.
A crash on The Smiler roller-coaster at Merlin’s Alton Towers theme park in June caused serious injury to four people, including a teenage girl who subsequently had to have her leg amputated above the knee.
Aside from the cost of legal and potential compensation the incident, which happened on the park’s newest and highest profile roller-coaster is expected to have dented the appeal of white knuckle rides.
Merlin also owns Madame Tussauds and Legoland Windsor as well as other attractions like the London Dungeons and operates the London Eye. Reduced overseas tourists into the UK due to Euro weakness and other foreign exchange pressures were also challenges noted by Barclays.
Barclays has reduced its full year forecast for Merlin by 2%, but retains a positive outlook for the share.
“While we do not expect an upbeat Q2 statement, Merlin remains our preferred 3-5 year pick and we would view any weakness around the second quarter as an opportunity to further accumulate,” analyst Vicki Stern said in a note.
Barclays elsewhere repeated an ‘overweight’ rating for online clothes retailer ASOS (LON:ASC) and increased its target price to 4,200p following Tuesday’s upbeat trading update. At the same time the bank’s target for Marks & Spencer (LON:MKS) was reduced to 580p, and an ‘equal weight’ rating was retained.
Credit Suisse opinion of Tate & Lyle (LON:TATE) is a pinch sweeter as the investment banks rating improves to ‘neutral’ from ‘underperform’.
Cable & Wireless Communications (LON:CWC) has been upgraded by Goldman Sachs, which repeated a ‘buy’ recommendation and moved its target to 83p from 70p.
Deutsche Bank upgraded Cairn Energy (LON:CNE) and Premier Oil (LON:PMO) with the former lifted to ‘buy’ with a 225p target while the latter’s ‘buy’ recommendation was repeated with a newly increased target of 215p.
Cairn was described as a well funded E&P capable of ‘exploring through the cycle’, whereas Premier is said to have a ‘sizeable discount to core net asset value’.
At the same time, Deutsche also downgraded Ophir Energy (LON:OPHR) which is rated ‘hold’ with a 140p price target, down from 165p.
Publishing and media group Pearson (LON:PSON) was downgraded to ‘sell’ from ‘hold’ as analyst Sarah Simon says it is not yet making the grade.
RBC Capital cuts Jupiter Asset Management (LON:JUP) to ‘sector perform’ from ‘outperform’.
Rolls Royce (LON:RR.) is downgraded to ‘neutral’ by Exane BNP Paribas, which reduces its target to 840p from 950p.