Image source: SeaWorld Entertainment.

If you want a stock that zigs when conventional wisdom suggests it should zag, try SeaWorld Entertainment (SEAS 0.21%) on for size. Shares of the theme-park operator moved 6.7% higher last week despite the announcement that the company will suspend its quarterly payouts. 

This is the same stock that seemingly should have been a winner after the company announced an end to its orca breeding program and a plan to wind down its orca performances earlier this year. Pleasing activists -- at least some activists, since PETA and others are still holding out for more -- should have helped make the stock less controversial and more acceptable to investors, but that didn't happen. The stock has shed more than a fifth of its value since March's announcement.

SeaWorld's stock was a better performer when it was running more afoul of Blackfish-fed critics, and this week it showed that it can thrive despite disappointing its income-seeking investors. It bears pointing out that the stock did initially take a big hit on Tuesday, when the company announced that it will end its quarterly dividends. The big bounce happened during the final three trading days of the week, when the stock soared 11% following a timely analyst upgrade.

Citi performs a sea rescue

Citigroup analysts Jason Bazinet and Andres Davagnino upgraded the stock following the dividend cut. They view the move as a positive, given the EBITDA erosion that's been taking place since peaking shortly after its 2013 IPO. 

SeaWorld's suggestion that it will spend some of the money saved on the quarterly distributions to buy back stock suggests that the dividend cut wasn't dictated by a violation of debt covenants. In other words, it's SeaWorld dictating the move and not its creditors. 

Bazinet and Davagnino also think SeaWorld will be well served by deploying some of the money saved into capital expenditures at its theme parks. CEO Joel Manby, who joined SeaWorld Entertainment last year, has already approved several new rides and attractions. He suggested that two or three new attractions for Orlando will be announced by the third-quarter earnings call. To that end, SeaWorld San Antonio has teased on social media that a Monday announcement will involve what appears to be a major new ride.

A SeaWorld future that relies more on thrill rides than controversial marine-life shows isn't a bad thing. It may seem like a painful if not awkward shift now, but it's the right approach for the long haul.

Citi is boosting its rating on SeaWorld stock from "neutral" to "buy." The analysts see the floor at $10 under a bearish scenario where attendance continues to decline with no expense savings and price erosion next year. The bullish scenario -- with recovering attendance, expense savings, and growing EBITDA again -- has a ceiling of $18. Analysts are splitting the difference with a price target of $14. That's not a lot higher than where the stock was after this past week's rally, but at least it points the shares in the right direction.