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Merlin share price down ahead of full-year results

Merlin Entertainment’s (LON:MERL) shares have been trading in negative territory today as investors brace for the blue-chip company’s full-year results announcement tomorrow.

The operator of the Sea Life centres and Legoland theme parks in Europe, North America and Asia is trying to boost visitor numbers after an accident last year left four teenagers seriously injured and hit the company just before the peak summer trading season. After the June 2 accident on the Smiler rollercoaster, Merlin closed the Alton Towers theme park in the UK for five days, temporarily shut other similar rides at Thorpe and Chessington, and stopped marketing, which halted its “momentum” ahead of the school holidays.

A month after the accident, Merlin warned that it could be 2017 before visitor numbers at the theme park recover. Declining to give specific figures, CEO Nick Varney, said at the time: “In the aftermath of the accident obviously Alton Towers suffered quite a substantial drop in visitation, which is the main driver of revenue.” Despite the gloomy expectations, analysts now forecast Merlin’s pre-tax profit to be flat at £249 million on last year’s figures.
By 12:18 GMT, Merlin’s share price had eased 0.93 percent to 434.90p. Although down the stock was outperforming the FTSE 100 benchmark index, which had meanwhile shed 1.53 percent to 5,871.47 points.
Last week, Numis reiterated its ‘hold’ recommendation and target price of 400p on the theme operator. Analyst Ivor Jones said in a note to clients: “Merlin’s share price has outperformed the market over the past year, despite the impact on profits and sentiment of the accident at Alton Towers in mid-2015. We believe this share price performance reflects the long-term investment attractions of the business in a turbulent market.” He added that Merlin’s global consumer exposure and growth potential had delivered material outperformance for investors in the past year and Numis saw no reason to chase the shares ahead of the company’s annual update.
As of 12:38 GMT, Wednesday, 24 February, Merlin Entertainments share price is 435.40p.

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