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Stifel: Funko's Q1 Impresses Despite Toys R Us Liquidation

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Stifel: Funko's Q1 Impresses Despite Toys R Us Liquidation

The Street was unimpressed by Funko Inc (NASDAQ: FNKO)’s sturdy first quarter. The stock plunged 7.8 percent in spite of top- and bottom-line beats, but Stifel came to the company’s defense.

The Rating

Analyst Drew Crum maintained a Buy rating on Funko with an $11 price target.

The Thesis

Citing growth in "Avengers," "Star Wars," "Rick & Morty" and Pop! vinyl sales, Crum said Funko exceeded Stifel's estimates in both revenue and earnings before interest, taxes, depreciation and amortization.

“The upside was partly due to a ‘pull-forward’ of shipments ahead of planned investment spending in Europe; this was anticipated and provided an estimated $3 million-$5 million benefit,” Crum said in a Friday note.

“ ... Even without this, overall the company fared far better (relative to toy manufacturers) amid the Toys R Us liquidation.”

Adjusted gross margins spiked 210 basis points year-over-year in spite of $1.8 million in Toys R Us-related charges, and Stifel regards Funko’s reaffirmed guidance a “modest upgrade” considering it reflects such growth-offsetting charges.

“Overall we thought this was a solid start to '18, marking the third consecutive quarter (and as a public company) Funko has met/exceeded Street numbers, which should build further confidence around the business, in our opinion." 

Price Action

Funko shares were up 1.63 percent at $9.68 at the time of publication Friday. 

Related Links:

Funko Shares Plunge To All-Time Low After BMO Downgrade

After Solid Q3, This Analyst Expects Double-Digit Sales Growth From Funko Next Year

Latest Ratings for FNKO

DateFirmActionFromTo
Mar 2021BMO CapitalUpgradesUnderperformMarket Perform
Mar 2021JP MorganUpgradesUnderweightNeutral
Mar 2021DA DavidsonMaintainsNeutral

View More Analyst Ratings for FNKO
View the Latest Analyst Ratings

 

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