Six Flags Entertainment Corporation (SIX) shares rose 5% during pre-market trading on Thursday before giving up ground later in the session. Janney Montgomery Scott upgraded Six Flags stock from Hold to Buy with a $30 fair value estimate, citing its attractive valuation and the diversity and exposure of its end markets. Analyst Tyler Batory thinks that investors are less focused on quarterly financials than normal amid COVID-19, which gives the new management team cover to make changes to the business.

The move follows an upgrade from B. Riley in mid-June to Buy with a $31 price target. Analyst Eric Wold said that a possible restart of China park development plans over the next 12 months could have a material upside benefit to current adjusted EBTIDA estimates. He also believes that the short-term attendance limitations miss the long-term return to normalized attendance next year.

Janney Montgomery Scott simultaneously downgraded Cedar Fair, L.P. (FUN), due to its reliance on just two theme parks, and SeaWorld Entertainment, Inc. (SEAS), due to its heavy revenue mix from California and Florida, to Neutral, making Six Flags the firm's top pick in the theme park space.

Chart showing the share price performance of Six Flags Entertainment Corporation (SIX)
TrendSpider

From a technical standpoint, Six Flags stock briefly broke out from trendline resistance before giving up ground later in the session. The relative strength index (RSI) remains slightly oversold with a reading of 39.98, but the moving average convergence divergence (MACD) remains in a modest bearish downtrend. These indicators suggest a lot of uncertainty in terms of future direction.

Traders should watch for a breakout from trendline resistance toward the 50-day moving average at $21.78 or Fibonacci levels of $23.64 over the coming sessions. If the stock moves lower, traders should watch for a breakdown from trendline support toward reaction lows and Fibonacci levels of $16.20 or a move toward Fibonacci levels of $12.92 over the coming sessions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.