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On Friday, Citi analyst James Hardiman adjusted the price target for Hasbro (NASDAQ:HAS) shares, increasing it to $75.00 from the previous figure of $67.00. The rating for the company remains at Neutral despite the price target change. The adjustment comes after Hasbro reported earnings that exceeded expectations for the fourth quarter. The stock has shown remarkable momentum, gaining over 13% in the past week alone. According to InvestingPro analysis, the stock’s RSI indicates overbought conditions, suggesting investors might want to exercise caution at current levels.
Hardiman noted that Hasbro’s strong performance in the fourth quarter was driven by several factors. Despite the expectation of little to no growth in the traditional toy sector in the short to medium term, the analyst pointed to margin improvements in the Consumer Products division and a genuine growth narrative at Wizards of the Coast (WOTC) as key elements contributing to a more optimistic outlook for the company. The company maintains impressive gross profit margins of 63.4%, while InvestingPro data reveals a strong dividend history spanning 45 consecutive years, demonstrating consistent shareholder returns despite market cycles.
The new price target of $75 is based on a valuation approach using an 11x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple, which corresponds to a 16x price-to-earnings (P/E) ratio applied to Citi’s 2026 earnings estimate for Hasbro. Current InvestingPro metrics show the company trading at an EV/EBITDA of 13.8x, with net income expected to grow this year. For deeper insights into Hasbro’s valuation and 12+ additional ProTips, subscribers can access the comprehensive Pro Research Report.
In his commentary, Hardiman highlighted the mixed aspects of Hasbro’s business, with traditional toys facing a challenging growth environment but other segments, such as WOTC, showing promising expansion prospects. This balance between different business units has led to an improved forecast for the company’s financial performance.
The updated price target reflects Citi’s recognition of Hasbro’s potential for margin improvement and growth in select areas, against the backdrop of a generally challenging market for traditional toy manufacturers. The maintained Neutral rating indicates that while the firm acknowledges Hasbro’s positive developments, it remains cautious about the company’s growth prospects in the broader toy industry.
In other recent news, Hasbro reported fourth-quarter earnings for 2024 that exceeded expectations, prompting DA Davidson to adjust its price target for the company’s stock to $75, up from $73, while maintaining a Neutral rating. Despite the positive earnings, DA Davidson revised its sales growth forecast for 2025 to a 1% year-over-year increase, citing challenges with the Nerf and Star Wars product lines. Meanwhile, Morgan Stanley (NYSE:MS) reduced its price target for Hasbro to $84 from $88 but kept an Overweight rating, acknowledging the company’s significant operating margin expansion, which exceeded 20% earlier than expected. Hasbro’s strategic growth plan, "Playing to Win," aims to expand its global reach and improve profit margins through 2027, with a focus on leveraging its brand portfolio and enhancing digital capabilities. The plan includes targeting mid-single-digit revenue growth and achieving $1 billion in cost savings by 2027. Analysts at Morgan Stanley noted that Hasbro’s new strategic plan was well-received, highlighting the company’s potential for growth through licensing partnerships and brand investments. Despite the challenges, Hasbro’s strategic initiatives and operational improvements have been positively received by analysts, who continue to see potential in the company’s long-term growth strategy.
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