On Thursday, Citi maintained its Neutral rating on Hasbro (NASDAQ:HAS) with an unchanged price target of $67.00. The decision came after Hasbro shares dropped 6% compared to a slight increase in the S&P 500, despite the company's significant bottom-line beat. Investors had anticipated a revision to the full-year outlook but were met with concern over weaker-than-expected sales trends as the holiday season approaches.
While the Consumer Products division experienced a sales shortfall, Citi noted positive aspects such as the strength in the Wizards of the Coast and Digital Gaming segment. Additionally, Hasbro's focus on margin prioritization and the successful implementation of cost-saving initiatives were highlighted as encouraging signs by the firm.
However, Citi expressed a desire to see clear indicators of recovery in the Consumer Products business, especially with the critical holiday season on the horizon. The firm's stance remained unchanged due to the mixed financial results, balancing strong performance in certain segments against underwhelming consumer product sales.
The analyst's comments reflect a cautious optimism regarding Hasbro's strategic decisions and segment performance, while still acknowledging the need for improvement in key areas. The $67 price target suggests that Citi sees limited upside potential for Hasbro's stock at this time, based on the current market conditions and company performance.
In other recent news, Hasbro Inc (NASDAQ:HAS). reported mixed results in its third-quarter earnings call for 2024. The company's total revenue for the quarter was $1.3 billion, marking a 15% decline from the previous year, primarily due to the divestiture of Entertainment One (eOne).
Despite this, Hasbro saw an expanded operating profit margin for the third consecutive quarter, attributed to strong growth in games and licensing. Notably, Magic: The Gathering and Dungeons & Dragons performed robustly, and licensing revenue from Monopoly Go! reached approximately $10 million per month.
In terms of future outlook, Hasbro is lowering its full-year revenue guidance for the Consumer Products segment but anticipates significant profit growth. The company is also targeting $750 million in cost savings by 2025, with $240 million achieved this year.
Despite an expected decline in the overall toy industry, Hasbro is optimistic about its strategic initiatives, focusing on cost-saving measures and new collaborations to drive future success.
InvestingPro Insights
Recent InvestingPro data provides additional context to Citi's analysis of Hasbro (NASDAQ:HAS). The company's market capitalization stands at $9.21 billion, with a P/E ratio (adjusted) of 27.91 for the last twelve months as of Q3 2024. This valuation metric aligns with Citi's neutral stance, suggesting the stock may be fairly valued at current levels.
InvestingPro Tips highlight that Hasbro's stock has taken a significant hit over the last week, with a 1-week price total return of -9.38%. This recent decline may reflect the market's reaction to the weaker-than-expected sales trends mentioned in Citi's report. However, it's worth noting that the stock's RSI suggests it may be in oversold territory, potentially indicating a buying opportunity for investors who share Citi's longer-term outlook.
Another relevant InvestingPro Tip points out that analysts anticipate a sales decline in the current year, which aligns with Citi's concerns about the Consumer Products division's performance. This expectation is supported by the revenue growth data, showing a -19.84% decline in the last twelve months as of Q3 2024.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide further insights into Hasbro's financial health and market position.
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