- JPMorgan sees the U.S. toy industry returning to better growth this year as it recover from the Toys "R" Us bankruptcy, but prefers Mattel over Hasbro (NASDAQ:HAS).
- "While we admire HAS’s long-term potential, we rate it Neutral with a Dec 20 PT of $113 (8% upside) on valuation and near-term risks. Longer term, HAS’ results are bolstered by its strong brand portfolio and growing digital games, while the ETO acquisition should unlock synergies. However, ahead of the 4Q print, we worry about a shortened 2019 holiday, expectations on Frozen 2 and Star Wars sellthrough, and remnant supply chain pressures. Our 4Q19 revenue and EPS estimates are thus 1% and 3% below consensus, respectively."
- The JPMorgan analyst team also points to a content cliff this year following the success of Bumble Bee and Disney blockbusters in 2019.
- The firm sees Hasbro valuation full at a 20X price-earnings ratio and 14X EV/EBITDA multiple.
- JP starts off coverage on Hasbro with a Neutral rating and price target of $113 vs. the average sell-side PT of $115.73.