This Funko Analyst Is Bearish On Stock, Points To 'Elevated Exposure' To Collectibles

Shares of Funko Inc FNKO have dropped more than 56% over the past six months, despite having recovered by almost 7% so far in 2023.

To achieve the consensus EBIT growth estimates of 50% CAGR from 2022 to 2026, the company would need to execute successfully "against a relatively complex set of initiatives," according to Goldman Sachs.

The Funko Analyst: Stephen Laszczyk initiated coverage of Funko with a Sell rating and a price target of $8.50.

The Funko Thesis: The consensus estimates for EBITDA seem aggressive, amid “our outlook for lower margins,” Laszczyk said in the initiation note.

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While Funko could grow its revenues to $2 billion over time, “we believe that recent mistakes in implementing new distribution and ERP systems as well as the company’s lack of demonstrated margin-accretive growth historically lend credence to conservatism on margins,” the analyst wrote.

“Further, we see the company’s elevated exposure to the collectibles product vertical (75% of revenue from Pop!), where we expect revenue growth to revert to the mean after experiencing strong COVID demand, as a potential downside risk,” he added.

FNKO Price Action: Shares of Funko had declined by 4.30% to $11.58 at the time of publication Wednesday.

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