HAS: Piper downgrade to Neutral

Piper Jaffray’s Stephanie S. Wissink believes that although Hasbro, Inc. HAS has limited upside, the long-term potential for value creation remains intact.

Wissink downgraded the rating on the company from Overweight to Neutral, with a price target of $88.

Long Term Story Intact

“We believe shares deserve an above historic average multiple given stronger internals, cash flow, and strategic clarity,” the analyst mentioned.

Wissink noted that toy stocks have been experiencing trading seasonality, with the volatile months nearing.

“Exiting this period, as 2017 comes into sharper focus, the upside case could be more compelling,” the analyst said.

Holders, Not Sellers

Wissink believes that Hasbro’s shares are fairly valued at present, and stated that “we remain holders and would look for similar entry points with greater visibility if it improves with 2H and 2017 drivers.”

The analyst pointed out that the company’s execution has been “outstanding” and cash flow has remained attractive, which offers secondary optionality for market share gains and growth, thereby justifying the current stock valuation.

“Our checks suggest bookings rates for Hasbro brands are steady to improved for holiday 2016, and we expect another robust selling cycle in 2017,” according to the Piper Jaffray report.