UPDATE: Monness Crespi Hardt Upgrades Hasbro on Strong Visibility Into Sales, Earnings Growth
In a report published Tuesday, Monness Crespi Hardt analyst Jim Chartier upgraded the rating on Hasbro (NASDAQ: HAS) from Neutral to Buy, and named a $60.00 price target.
In the report, Monness Crespi Hardt noted, “We are upgrading shares of Hasbro to Buy (from Neutral) and initiating a $60 price target. We believe Hasbro has strong visibility into sales and earnings growth for the next two years. We expect growth in the Girls segment, driven by continued momentum in My Little Pony, the 2014 re-launch of Littlest Pet Shop and growth in Nerf Rebelle. Wizards of the Coast can drive mid-single digit growth in the Games segment even with growth decelerating to +10-15%. In addition, we believe broad based strength in Games year to date indicates a turning point/stabilization in the traditional games business. Finally, a strong TV and movie line-up should drive double digit growth in Boys for the next two years. Margin expansion will be driven by the company's cost saving initiative (another $52 - $55 million will be realized after 2013), leverage on emerging market sales growth and a mix shift toward entertainment and licensing revenue. In short, we expect revenue growth will accelerate to the high single digit range for the next two years and see the potential for more than $4.00 EPS in 2015 and nearly $5.00 EPS in 2017. Sell-side sentiment remains cautious (4 buy ratings, 7 holds and 2 sells). Our $60 price target is based on 15x $4.00 EPS in 2015. The stock has traded at an average valuation of 13.6x ntm EPS over the past three years. We believe a premium is warranted given improving visibility into sales and earnings growth.”
Hasbro closed on Monday at $49.72.
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