JAKKS Pacific Investors Get Coal In Their Stockings As Company Cuts Guidance

Following the negative pre-announcement from JAKKS Pacific, Inc. JAKK last Friday, BMO Capital Markets downgraded the shares of the company and lowered its price target. The firm shared in a note released on Monday this is the second outlook reduction in two months.

Company's Line At Retail Suffering

The announcement, however, is not surprising for analyst Gerrick Johnson, as his recent retail checks revealed a negative trend, with each consecutive store visit raising additional red flags. Johnson noted that for a year that began with a lot of promise — including a compelling line of products, increased number of licensed tie-ins and solid performance of the broader toy industry — 2016 has culminated in a damp squib for the company's retail line.

Multiple To Be Impaired For Near To Medium Term

Although conceding that some of the weakness is due to market performance, BMO Capital Markets said it sees weakness in certain areas and brands in which the company participates. The firm also sees further degradation in good will with Wall Street. Accordingly, the firm believes even with a repair in business, multiple will be impaired for the near to intermediate term.

Lowering Estimates, Rating And Price Target

The firm lowered its 2016 and 2017 revenues, EBITDA and EPS estimates for the company. As such, the firm downgraded the shares of the company to Market Perform from Outperform and reduced its price target to $6 from $9.

At the time of writing, the stock was tumbling 27.30 percent to $5.12.