Hasbro Earnings 'Better Than Feared,' KeyBanc Says Near-Term Catalysts Exist

Hasbro, Inc’s HAS fourth-quarter results were better than feared and the upcoming Toy Fair could provide more clarity around the company’s fiscal 2020 outlook, becoming a catalyst for the stock, according to KeyBanc Capital Markets.

The Hasbro Analyst

Brett Andress maintained an Overweight rating on Hasbro with a price target of $110.

The Hasbro Thesis

Hasbro’s fourth-quarter performance was better than feared, with Partner Brands offsetting the underperformance of the company’s other three segments, Andress said in the note.

Although gross margins missed expectations, EBIT margins came in at 14.6%, versus the consensus of 11.9%, most of which was driven by a significant decline in advertising costs.

Despite a tough macro environment and negative commentary from several industry participants, the demand for Hasbro appears intact, with low-single-digit growth in point of sales in North America in the fourth quarter, the analyst said. He added that the company was witnessing early momentum, with around 10% growth in point of sales year to date.

“Europe is seeing similar improvement as declines moderated in 4Q19, turning to growth YTD,” Andress wrote. He also said that Hasbro’s brand revenues grew more than 30% in fiscal 2019, backed by a strong first year for Magic: The Gathering Arena.

HAS Price Action

Shares of Hasbro were down 1.27% to $96.95 at time of publication.

Photo by Wayne Low on Unsplash