NEW YORK (TheStreet) -- Wells Fargo raised its rating on SeaWorld Entertainment (SEAS) - Get SeaWorld Entertainment, Inc. Report stock to "outperform" from "market perform" on Friday morning. The firm has a valuation range of $22 to $24 on SeaWorld shares.
The upgrade follows the announcement SeaWorld made on Thursday that it will cease breeding the killer whales held at the company's three theme parks in the U.S.
SeaWorld's decision is the result of a change in consumer perception about keeping large intelligent marine mammals in captivity and whether or not humans can provide the care the animals need.
"We believe SEAS announcement to sunset orcas at its parks along with the new Human Society of the United States relationship provides both a data based and intuitive based path to improved attendance, revenue and EBITDA," Wells Fargo said in a note.
SeaWorld has struggled since the public began questioning its animal husbandry practices, thanks in part to an unflattering 2013 documentary highlighting the 2010 death of a SeaWorld trainer, killed by one of the orcas she had been working with.
Based on the results of a consumer study and the historical based studies of new attractions, SeaWorld management believes the orca breeding decision should generate between $380,000 and $940,000 in attendance, $20 million to $80 million of revenue and $25 million to $65 million of adjusted EBITDA over the next three to five years beginning in 2017, the firm added.
SeaWorld stock closed higher by 9.35% to $18.72 on Thursday.
Separately, TheStreet Ratings has set a "hold" rating and a score of C- on SeaWorld Entertainment stock. The primary factors that have impacted the rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and growth in earnings per share. However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: SEAS