Hargreaves Lansdown is still upbeat on Merlin Entertainments (LON:MERL) despite news on Thursday that its theme park operation was facing a tough time.
Merlin, which runs the Alton Towers theme park in Staffordshire where an accident took place in June, said its Legoland Parks operating group was still trading strongly.
But it said fewer visitors to its theme parks, particularly Alton Towers, had offset that, as had the weakness of the euro at its London attractions such as Madame Tussauds.
It expects resort theme parks' EBITDA to be in the lower part of the guided range of £40mln-50mln in 2015, provided trading improves as autumn events such as Halloween kick in.
Merlin added: "Although difficult to assess at this stage, we continue to believe there may be an ongoing adverse impact on the resort theme parks operating group profitability in 2016."
Richard Hunter, Head of Equities at Hargreaves, said the impact of the Alton Towers accident had inevitably besmirched what was otherwise a strong trading update.
But he added: "Merlin is far from being a one trick pony. The Legoland Parks continue to grow apace, even against strong comparatives, whilst the strategy of turning parks into resorts with the opening of new hotels at several location is ongoing.
Meanwhile, in addition to this year’s launch of seven attractions, a further seven are planned for next year across the globe, with Legoland and Madame Tussauds being of particular focus.
"The benefits of Merlin’s diversity has been borne out by a share price which, although having dipped 13% over the last three months nonetheless remains up 12% over the last year, a strong outperformance of the wider FTSE100 which has fallen 8% in that period.
"With more in the pipeline and the clouds of the tragedy likely to lift over time, the general view of the company’s prospects remain buoyant, with the market consensus coming in at a strong buy."
There wasn’t a great deal of goodwill towards the oil services firm Hunting (LON:HTG) following a downgrade to ‘underweight’ by the team at JP Morgan Cazenove.
Its highly regarded analysts said the US market recovery had been deferred until 2017, and they said the saw “earnings downgrade risks” next year as a result.
Pegging its valuation of the stock back to 338p from 518p, JPMC said Hunting may have to make a series of swingeing cuts to “maintain balance sheet strength”. This might include hacking down the dividend.
Against this backdrop it is hardly surprising then the shares dropped 8% to 432.6p.
A downgrade by Credit Suisse prompted a rather less precipitous fall in the value of electricity firm SSE (LON:SSE), which was down £14.43.
Credit Suisse took its recommendation to ‘neutral’ from ‘outperform’ and dropped its price target £1 to £16.
Investec downgraded valve maker Rotork (LON:ROR) to ‘sell’ from ‘hold’ following its profit warning and £125mln acquisition of Bifold.
Veteran analyst Michael Blogg told investors: “Rotork has recently derived over 50% of revenue from Oil & Gas, and Bifold increases this proportion.
“The group’s ‘activity indices’ provided some comfort but clearly the conversion to firm profit-generating orders is slipping. News from this sector shows that the situation continues to deteriorate.
“There are likely to be more attractive opportunities, in the next few months, for investors with a longer-term ambition of investing in Rotork.”
On the upside, the engineer GKN (LON:GKN) was boosted to ‘outperform’ from ‘sector perform’ by RBC Capital, which also raised brewer SAB Miller (LON:SAB), currently subject to bid interest, to ‘sector perform’ from ‘underperform’.
Finally, the team at Liberum are fans of Pets at Home (LON:PETS), which it says has a “compelling strategy”.
Its reiterate ‘buy’ and 360p price target followed a capital markets day at which the retailer flung open its doors to analysts and major investors.
“[It] focused on seamless shopping between stores and online, which lies at the heart of management's strategy.
“The loyalty scheme is increasing customer spend and offers a significant opportunity to continue driving organic growth. The growing use of in-store technology should strengthen customer engagement and improve space productivity.
“The store visit highlighted PETS' in-house design and sourcing capabilities and product authority that underpin its leading merchandise offer.”