DA Davidson lifts Hasbro stock target to $75, keeps Neutral rating

Published 24/02/2025, 21:06
DA Davidson lifts Hasbro stock target to $75, keeps Neutral rating

On Monday, DA Davidson analyst Linda Bolton Weiser adjusted the price target for Hasbro stock (NASDAQ:HAS) from $73.00 to $75.00, while maintaining a Neutral stance on the company. Currently trading at $66.81, Hasbro has shown impressive momentum with a 20.84% gain year-to-date. The revision follows Hasbro’s fourth-quarter performance in 2024, which surpassed expectations. According to InvestingPro data, the stock’s RSI suggests it may be in overbought territory. Despite this, DA Davidson has revised its 2025 sales growth forecast for Hasbro downward from 4% year-over-year to 1%. This conservative outlook is attributed to anticipated challenges within the Nerf and Star Wars product lines.

Weiser notes that while Hasbro’s strategic plan, which outlines firm targets through 2027, has been well-received by the market, there are concerns regarding future profitability. The company maintains impressive gross profit margins of 63.41%, according to InvestingPro data. The company’s shares experienced a 13% increase, which analysts believe is due to investor confidence in the strategic targets set by Hasbro. The planned launch of Exodus in the following year is expected to contribute to a sales boost.

DA Davidson expresses caution, pointing out that margin expansion for Hasbro is heavily reliant on improving toy profitability. This could pose a risk if toy sales do not meet expectations and continue on a downward trend. Notable strengths include Hasbro’s 45-year track record of consecutive dividend payments and strong financial health, as indicated by InvestingPro’s comprehensive analysis, which shows liquid assets exceeding short-term obligations. In light of these factors, DA Davidson is maintaining its EBITDA projections but has lowered the earnings per share (EPS) estimate by $0.05 to $4.31 for 2025.

The revised price target is based on a multiple of 16 times the estimated 2026 earnings per share of $4.71, an increase from the previous multiple of 15 times. Based on InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels. DA Davidson’s analysis reflects a careful approach, acknowledging Hasbro’s potential to achieve sales acceleration through new product launches while also recognizing the challenges that may impact the company’s financial performance. For deeper insights into Hasbro’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, covering over 1,400 US stocks.

In other recent news, Hasbro has reported fourth-quarter earnings that exceeded analysts’ expectations, prompting Citi and DA Davidson to adjust their price targets for the company to $75, while maintaining a Neutral rating. Citi’s analyst James Hardiman cited margin improvements in the Consumer Products division and growth at Wizards of the Coast as key contributors to the strong performance. DA Davidson’s Linda Bolton Weiser also noted the positive earnings but revised the sales growth forecast for 2025 due to challenges with Nerf and Star Wars product lines. Meanwhile, Morgan Stanley (NYSE:MS) reduced its price target for Hasbro to $84 but maintained an Overweight rating, highlighting the company’s significant operating margin expansion and promising prospects for 2025.

Hasbro’s strategic growth plan, "Playing to Win," aims to drive growth through 2027, focusing on expanding global reach and improving operating profit margins. The plan includes leveraging Hasbro’s brand portfolio and enhancing digital and direct-to-consumer capabilities. The company expects its operational excellence program to deliver $1 billion in gross cost savings by 2027. Analysts at Morgan Stanley remain optimistic about Hasbro’s potential, particularly with upcoming releases like Magic: The Gathering Universes Beyond and the first self-published video game, "Exodus," expected in 2026. Despite the challenging market for traditional toys, Hasbro’s strategic initiatives and diverse brand portfolio are seen as strong points for future growth.

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