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Buy SeaWorld into the sell-off, Citi says

SeaWorld in San Diego, California.
Wolfgang Kaehler | LightRocket | Getty Images

Citi upgraded SeaWorld shares to buy from neutral, saying the sell-off presents a "compelling" risk-reward opportunity for investors.

SeaWorld is down 38 percent this year through Wednesday due to declining profitability and attendance numbers. The theme park operator announced Monday it will no longer pay a dividend.

"For the last few years, SeaWorld has been dogged by both competitive pressure and adverse publicity from 'Blackfish' [documentary]," analyst Jason Bazinet wrote in a note to clients Wednesday.

"Yet, we see a few reasons to take a more positive stance on the shares: 1) Some of the 2016 EBITDA declines are one-off and could revert in 2017 and 2018, 2) The company can use the freed capital to reinvest in park capex and drive attendance in 2018 and 3) Consensus estimates have come down enough to make the risk/reward more interesting, in our view."