Hasbro's Cost Cuts And Digital Expansion Underestimated? J.P. Morgan Sees Higher Growth Potential

J.P. Morgan analyst Christopher Horvers reiterated an Overweight rating on the shares of Hasbro Inc HAS and maintained a price forecast of $75.00.

HAS exceeded street expectations for the fourth quarter, in line with the analyst’s updated forecast, driven by strong performance in Consumer Products and Wizards, higher gross margins, and operating income 15% above Consensus Metrix.

The 2025 guidance projected EBITDA of $1.1-$1.15 billion versus the consensus of $1.143 billion, aligning with the analyst’s modestly below expectation view.

The fourth-quarter results provided enough upside to position HAS near the Street’s range for 2025. After resetting expectations following a tough third quarter, management expressed more optimism, with sales growth in Wizards (expected) and, importantly, Consumer Products (which the Street anticipated underperforming, but management showed confidence in).

This strengthened the outlook for Magic to achieve a record year, with Final Fantasy/Spider-Man contributing and a turnaround in the CP business beginning, partly due to the movie slate and a broader range of more affordable products, noted the analyst.

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Additionally, ongoing cost-saving measures (such as design-to-value and corporate efficiencies) make the 2025 forecast achievable.

Adding to the positive outlook, management projected EBITDA of ~$1.4 billion in 2027, higher than the consensus estimate of $1.3 billion.

The analyst maintains an Overweight rating on HAS for the following reasons, including the analsyt’ estimates being ahead of the Street’s, as the analyst believes consensus estimates for cost efficiency and digital gaming are too conservative, with both expected to increase heading into 2025.

Despite a shorter holiday season, the analyst sees the industry positioned for stronger growth this year, driven by the emergence of growth in lower-cost and shorter-replacement-cycle categories.

Retailers, especially Target Corp, are focusing on driving traffic through events, with toys playing a key role in their strategy.

By the end of 2025, the analyst anticipates the full impact of HAS’s $750 million cost-reduction initiative, while the consumer products segment should benefit from increased innovation, as well as growth in MTG driven by its Universes Beyond strategy (including Final Fantasy and Marvel, with continued momentum from MH3), and a similar flow-through from Go! product lines.

The price forecast of $75 is based on ~11x EV/EBITDA on the analyst’s 2026 estimates, slightly below where it currently trades on 2025 and its 3-5Y average multiple.

Price Action: HAS shares are trading lower by 2.34% at $65.98 at the last check Monday.

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