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Merlin Entertainments is a 'sell', Berenberg says

By Sean Farrell

Date: Thursday 21 Mar 2019

Merlin Entertainments is a 'sell', Berenberg says

(Sharecast News) - Merlin Entertainments is incorrectly "priced for perfection" and investors should sell the theme park operator's shares, Berenberg analysts said.


Berenberg's Owen Shirley and his team cut their recommendation on Merlin shares to 'sell' from 'hold' and reduced their price target to 315p from 340p.

Investors are too optimistic about Merlin's growth prospects, according to Berenberg. The Midway division, whose attractions include Madame Tussauds and Blackpool Tower, faces one-off headwinds and is not on as firm a path to growth as the market assumes, they said.

Growth is getting tougher at Legoland parks and Merlin's resort theme parks such as Alton Towers will struggle to match 2018's "knockout" performance if temperatures fail to soar again, they added.

"We struggle to see the company achieving EBIT growth in any division this year, despite its cost-savings plan and continued investment in new sites and hotels," the analysts wrote.

Merlin shares fell 5.4% to 348.9p at 12:19 GMT.

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