JAKKS Pacific Has Now Cut Annual Guidance 4 Times In 6 Years

Shares of JAKKS Pacific, Inc. JAKK plunged more than 32 percent to set a new 52-week low after it slashed its annual outlook due to lower-than-expected sales of key product lines. The company has cut its annual guidance four out of the last six years.

JAKKS is now projecting 2016 EPS of $0.01–$0.05 (vs. $0.56 earlier), adj. EBITDA of $37 million (vs. $53 million previously) and revenue of $700 million (vs. $755 million prior).

Stifel, which has a Hold rating on the stock, cut its estimates and now forecast adj. EBITDA of $37 million/$50 million/$56 million for 2016-'18, respectively. But, it said “confidence in our assumptions beyond this year, is below average.”

Implications For The Sector

Importantly, Stifel said the JAKKS shortfall is a negative data point for other toy makers. Though its estimates for Hold-rated Hasbro, Inc. HAS and Mattel, Inc. MAT remain unchanged, the brokerage said the JAKKS news “gives us pause.”

“We've been generally underwhelmed by category performance since our pre- Black Friday checks, and perhaps more pessimistic relative to some of our peers, assuming the U.S. industry is flattish for the holiday period and up +3 percent in '16,” analyst Drew Crum wrote in a note.

The analyst cited a recent NPD data that showed a 3 percent drop in cumulative holiday retail sales for select general merchandise categories (through the first five weeks of the holiday season).

“Given the company's inconsistent track record, and a lack of confidence in #s going forward, we remain Hold rated on the shares,” Crum added.

At last check, shares of JAKKS Pacific plummeted 30.14 percent to $4.93. Crum has cut his price target by $1 to $7.