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Investors Brace For A Q3 Hasbro/Mattel Showdown

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Investors Brace For A Q3 Hasbro/Mattel Showdown

Ahead of third-quarter earnings releases by Hasbro, Inc. (NASDAQ: HAS) and Mattel, Inc. (NASDAQ: MAT), both scheduled for next week, Jefferies looked into the prospects and problems for both toy makers. The firm feels the third-quarter results and the fourth-quarter guidance are critical, as these companies derive two-thirds of their annual revenues in the second-half.

Hasbro's Weakness: Boys

While analyst Trevor Young recapped the earnings per share and revenue outperformance for Hasbro in the second quarter, he noted that the stock declined following the results. The analyst feels the slowdown seen in boys in the second quarter could continue into the third quarter. However, the analyst sees offsetting impact from a continued ramp in Walt Disney Co (NYSE: DIS)/girls as well as Trolls and games, with the launch of Magic's Eldritch Moon.

Related Link: Mattel Not Toying Around With Its Turnaround Effort

The analyst said he is roughly in line with the consensus revenue estimate of $1.55 million for the second quarter, while being below-consensus on earnings per share at $1.73 versus the consensus of $1.75.

Focus On Barbie, American Girl And GM For Mattel

Jefferies said it would watch to see if there is continued momentum in Barbie after its outperformance in the second quarter. The firm, however, feels the segment will decelerate, given the 650 basis points tougher comparisons, a large third-quarter revenue base and 1 times of license revenue in the second quarter.

Ratings, Price Targets

On Hasbro, the firm has a Hold rating and on Mattel, it has a Buy rating. Valuing both companies at 18 times 2017 earnings per share, Jefferies has a $82 price target for Hasbro and a $36 price target for Mattel.

At time of writing, Hasbro shares were down 0.34 percent at $78.42 but Mattel shares were up 0.92 percent at $29.71.

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Latest Ratings for HAS

DateFirmActionFromTo
Feb 2021BMO CapitalMaintainsMarket Perform
Feb 2021DA DavidsonMaintainsBuy
Dec 2020CitigroupInitiates Coverage OnBuy

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QMCONorthland Capital MarketsInitiates Coverage On12.0
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