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Investing.com - DA Davidson lowered its price target on Funko (NASDAQ:FNKO) to $5.00 from $7.00 on Friday, while maintaining a Buy rating on the collectible figurine maker’s stock. The company, currently valued at $137 million, has seen its shares decline significantly to $2.47, trading near its 52-week low. According to InvestingPro analysis, the stock appears undervalued at current levels.
The price target reduction follows Funko’s second-quarter 2025 results, which showed sales exceeding expectations but earnings falling short due to tariffs and unfavorable expense comparisons. The company’s revenue declined 9.07% in the last twelve months, with a current free cash flow yield of 26%.
Funko’s management has issued new guidance indicating anticipated improvement in the second half of the year, though DA Davidson noted that analyst estimates will need to be reduced.
Despite the near-term challenges, DA Davidson identified several potential catalysts for the stock, including the appointment of a new CEO, resolution of refinancing and covenant concerns, and the possibility of a business sale, either in whole or in part.
The research firm expects the resolution of debt-related issues and the announcement of a new CEO are the most likely near-term developments that could positively impact Funko’s share price.
In other recent news, Funko Inc . reported its second-quarter earnings for 2025, which fell short of analyst expectations. The company announced an earnings per share (EPS) of $0.48, which was significantly lower than the forecasted $-0.32, resulting in a surprising 250% variance. Revenue was also below expectations, coming in at $193.5 million, compared to the anticipated $203.21 million, marking a 4.78% shortfall. This earnings report led to a negative reaction in premarket trading. These developments highlight the company’s recent financial performance challenges.
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