Goldman Sachs lifts Funko stock rating, cuts price target to $5.50

On Tuesday, Goldman Sachs adjusted its stance on Funko shares (NASDAQ:FNKO), upgrading the stock from Sell to Neutral. The revision of the rating comes along with a decrease in the price target, now set at $5.50, down from the previous target of $7.00. Stifel analysts cited a more balanced risk/reward outlook as the primary reason for the rating change. According to InvestingPro data, the stock has shown significant momentum, posting a remarkable 31% return over the past week, though it remains down 49% over the past six months.

The reassessment by Goldman Sachs follows the recent measures taken by Funko’s management to mitigate risks, which were detailed during the company’s earnings call. Additionally, the analysts noted positive developments regarding trade and tariffs with China this week, which have influenced the stock’s outlook. InvestingPro analysis indicates that while Funko maintains a Fair financial health score, its current ratio of 0.85 suggests some challenges in meeting short-term obligations. Get access to 12 additional exclusive ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.

In their scenario analysis, Goldman Sachs has incorporated these factors, leading to the conclusion that the potential return on Funko shares stands at about 6%. This figure is based on the new price target of $5.50. The analysts have employed a probability-weighted scenario framework to arrive at this valuation, which reflects their view of the stock’s future performance. While the company wasn’t profitable in the last twelve months, InvestingPro data shows analysts expect Funko to return to profitability this year, with projected earnings of $0.10 per share.

Goldman Sachs’ updated assessment of Funko reflects the firm’s recognition of the company’s proactive steps to address challenges and the evolving trade environment with China. The management’s efforts and the external trade updates have contributed to the analysts’ revised perspective on the stock.

The price target adjustment to $5.50 from $7.00 by Goldman Sachs suggests a more conservative expectation of Funko’s share value. Despite the downgrade in the price target, the upgrade from Sell to Neutral indicates a shift in the firm’s overall outlook from negative to a more neutral stance on the company’s stock.

In other recent news, Funko Inc . reported a significant earnings miss for the first quarter of 2025, with earnings per share (EPS) at -$0.33, falling short of the anticipated -$0.11. Despite this, the company’s revenue of $190.7 million aligned with expectations, indicating stable sales. The company also reported a net loss of $17.8 million and a gross margin of 40.3%. Funko has withdrawn its full-year 2025 outlook due to uncertainties surrounding tariffs, which are anticipated to add $45 million in costs. DA Davidson recently lowered its price target for Funko to $7.00 from $13.00 but maintained a Buy rating, acknowledging the company’s strategic efforts to mitigate tariff impacts. Funko’s strategies include price increases, cost reductions, and supply chain diversification, with plans to reduce U.S. product sourcing from China to 5% by the end of 2025. Additionally, Funko has made operational improvements, such as a 20% workforce reduction and market share gains in Europe, which outpaced the toy industry growth. The company remains focused on mitigating tariff impacts and exploring debt refinancing options.

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