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Hasbro Inc (NASDAQ:HAS), the iconic toy and game company, got an upgrade from JPMorgan on Thursday.
Following insightful meetings with Hasbro's CEO Chris Cox and CFO Gina Goetter at JPM's 52nd Annual TMC Conference, analyst Christopher Horvers, CFA has upgraded Hasbro from Neutral to Overweight. He also raised the price target from $61 to $74, that’s over 20% upside from current price levels.
Here's why he says Hasbro will achieve stellar performance in the coming months.
Horvers believes that the consensus forecasts for Hasbro's cost efficiency and digital gaming revenue are too conservative. He expects these areas to ramp up significantly in the second half of 2024 and into 2025.
This confidence is based on his assessments and discussions at the conference, suggesting that Hasbro's strategic moves in cost management and digital gaming will outperform market expectations.
Hasbro expects its $750 million cost-saving program to fully materialize by the end of 2025, boosting profitability.
Moreover, despite some moderation in point-of-sale trends, JPMorgan sees the toy industry growing this year.Retail giants like Walmart Inc (NYSE:WMT) and Target Corp (NYSE:TGT) are pivoting towards event-driven traffic, with toys being a key attraction. Hasbro can capitalize on this shift, especially with cleaner industry inventories and strong product placements, the analyst says..
Also Read: Is Hasbro Outperforming Other Consumer Discretionary Stocks This Year?
Hasbro will benefit from shifting its Transformers franchise to the third quarter and early wins from enhanced merchandising under new management. This strategic timing, combined with innovations across various toy lines, will drive strong performance in the latter half of 2024, according to Horvers.
Additionally, Hasbro anticipates its innovative products, including those from the “Magic: The Gathering” universe and new digital gaming initiatives, to contribute significantly to the top line.
Horvers' upgraded price target reflects his bullish outlook, based on a 12x EV/EBITDA multiple, which aligns with Hasbro's historical averages.
With Hasbro's strategic initiatives and industry positioning, there's potential for the stock to exceed this target, making it an exciting play for investors.
HAS Price Action: On Wednesday, Hasbro stock closed at $60.33, down 3.44%. However, it was up 3.6% premarket at the time of publication Thursday.
Photo: Shutterstock
