Hasbro a Buy on Strong Content and Leverage: Jefferies – Investopedia

America’s third-largest toy maker, Hasbro Inc. (HAS), received a bullish note from analysts at Jefferies on Friday. The investment bank initiated coverage on HAS at buy, along with issuing a $125 price target.

Jefferies also began coverage on Hasbro’s American rivals JAKKS Pacific Inc. (JAKK) and Mattel Inc. (MAT), reluctant to give the beaten-down stocks anything more than hold ratings.

Looking at Hasbro’s EPS Upside

As for Pawtucket, R.I.-based Hasbro, analysts note that the firm’s heightened investment spend is moderating, allowing for “expanding financial capacity and the creation of derivative optionality.” Jefferies says the multinational toy and game company will gain from a strong “tailwind” from its content, such as new toys, along with its improving leverage. Analysts foresee 15.5% upside in HAS shares from Monday afternoon at $108.22, justifying a buy on “multi-year EPS upside.” (See also: Hasbro Launches Its Own Fan Convention.)

On the other hand, Jefferies has warned investors on slow growth and high prices for shares of Mattel and JAKKS. Analysts indicate that Malibu, Calif.-based JAKKS has seen its brands suffer from less-than-spectacular name recognition, as the company is pressured to rely on licensed intellectual property to drive 70% to 80% of its product sales. Further, Jefferies says “variability in Q/Q operating performance” has led the firm to assign JAKKS a low “risk-adjusted multiple” to earnings.

Mattel, the maker of Barbie and Hot Wheels, received a hold rating from Jefferies, who suggest its $22 trading price properly reflects the company’s value. Until Jefferies sees a “multi-year framework to make Mattel consistently competitive across its portfolio of brands,” analysts suggest there is little hope for the toy maker to outperform the market. (See also: A Tale of Two Toy Makers: Mattel and Hasbro.)


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