Tuesday - Analysts at B.Riley have increased their price target on shares of Funko (NASDAQ: NASDAQ:FNKO) to $12.00, up from the previous $11.00, maintaining a Buy rating on the stock. The decision follows the company's performance and strategic moves that are seen as laying the groundwork for future profitability under new leadership.
The endorsement came after Funko was highlighted as the top pick at the B. Riley Securities 24th Annual Institutional Investor Conference last week. Analysts pointed to the years 2022 and 2023 as pivotal for the company, noting operational and strategic improvements that have positioned Funko for success. The analysts expressed confidence in Cynthia Williams, who recently assumed the role of CEO, to further enhance the company's profitability.
Funko has made strategic decisions to streamline its product offerings by reducing the number of stock keeping units (SKUs) and focusing on timeless "evergreen" properties to mitigate inventory risks at the wholesale level.
Additionally, the introduction of the Pop! Yourself feature on Funko's website is anticipated to contribute significantly to sales and margins. This new product offering is currently seen as undervalued by the market according to the analysts.
The company's recent financial performance has also been a factor in the upgraded outlook. Funko's first-quarter earnings before interest, taxes, depreciation, and amortization (AEBITDA) for 2024 surpassed estimates significantly, and management's projections for the second quarter are also higher than anticipated. These results have led analysts to believe that the company's unchanged guidance for the full year 2024 may be on the conservative side.
In summary, B.Riley's analysts have reaffirmed their Buy rating on Funko, with optimism about the company's direction and potential for increased profitability. The raised price target to $12.00 from $11.00 reflects this positive outlook.
InvestingPro Insights
Following the positive sentiment from B.Riley's analysts, the latest metrics from InvestingPro provide additional insights into Funko's (NASDAQ: FNKO) financial landscape. With a market capitalization of $448.62 million and a challenging P/E ratio standing at -3.36, the company's valuation reflects the hurdles it faces towards profitability. Notably, revenue for the last twelve months as of Q1 2024 has declined by 16.3%, signaling the impact of strategic shifts and market conditions.
InvestingPro Tips highlight a mixed picture: while analysts have revised earnings upwards, indicating optimism for Funko's upcoming period, the company is not expected to be profitable this year. Additionally, the stock's current RSI suggests it is in overbought territory, which could imply a near-term pullback. On the positive side, Funko has delivered a strong return over the last month of 35.0%, and a commendable 18.72% over the last three months, reflecting investor enthusiasm around its strategic moves and management's efforts.
For readers looking to delve deeper into Funko's potential, InvestingPro offers additional tips on the stock's performance and outlook. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover even more insights, including 4 additional InvestingPro Tips that could further inform your investment decisions.
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