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On Thursday, Morgan Stanley (NYSE:MS) made adjustments to its outlook on Hasbro stock, reducing the price target to $84 from the prior $88, while maintaining an Overweight rating. The firm’s analysts highlighted Hasbro’s impressive strides in profitability, noting a significant operating margin expansion that surpassed the 20% mark much earlier than anticipated. According to InvestingPro data, Hasbro’s stock has shown strong momentum with a 26% return over the past year, despite current trading near its 52-week high of $73.46.
Hasbro’s strong performance in the fourth quarter was seen as a capstone to a year marked by substantial improvements in profitability. The company achieved an operating margin expansion of over 1000 basis points, reaching a milestone well ahead of schedule. This accomplishment sets the stage for Hasbro to take a more aggressive stance in 2025 and the years to follow.
Analysts at Morgan Stanley are optimistic about Hasbro’s prospects as the company enters 2025 with positive momentum. They observed that toy demand has begun to stabilize, suggesting that the management’s efforts to turn the company around are starting to yield results. The upcoming releases of Magic: The Gathering Universes Beyond sets are also expected to stimulate increased demand for the brand. While InvestingPro data indicates analysts anticipate a sales decline in the current year, they also forecast a return to profitability, with projected earnings per share of $3.90 for 2024.
Additionally, the announcement of Hasbro’s new strategic plan was well-received. Although the plan’s targets align with general expectations, they underscore the company’s significant growth potential as it continues to invest in brands and categories with strong secular trends. The plan also aims to leverage Hasbro’s intellectual property through lucrative licensing partnerships.
Morgan Stanley’s analysts believe that the market currently undervalues Hasbro’s potential for earnings and cash flow. The conservative nature of the company’s targets, especially regarding the forecasted success of its first self-published video game, "Exodus," slated for release in 2026, suggests a careful approach to growth projections. Despite the lowered price target, Hasbro remains a top pick within Morgan Stanley’s leisure sector coverage.
In other recent news, Hasbro Inc (NASDAQ:HAS). has announced a strategic growth plan titled "Playing to Win," which aims to drive the company’s expansion through 2027. The plan includes expectations for mid-single-digit revenue growth and significant cost savings, with a target of $1 billion in gross cost savings by 2027. Hasbro’s strategy focuses on expanding its global reach and enhancing digital and direct-to-consumer capabilities. Meanwhile, Hayes, a global recruitment firm, reported a challenging fourth quarter of 2024, with a 56% year-on-year decrease in pre-exceptional operating profit. Despite the decline, Hayes achieved strong cash conversion and launched a new digital platform, TribeWorks, as part of its innovation efforts. The company secured structural cost savings of £55 million and anticipates market recovery, focusing on maintaining stable consultant headcount. Hayes has also been expanding its contracting business and targeting enterprise clients and managed service programs.
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