BofA Upgrades Hasbro’s Target Amid Strong Sales of Magic Set
BofA's Positive Update for Hasbro's Stock
BofA Securities has recently provided an updated outlook on Hasbro shares by increasing its price target to $90 from the previous $85. This adjustment is a result of encouraging feedback stemming from the release of the new "Magic: The Gathering" Bloomburrow set, which has been well-received among gaming enthusiasts.
Strong Sales Performance of the Bloomburrow Set
Insights from BofA Securities show that conversations with game shop owners and players of "Magic: The Gathering" reveal that the Bloomburrow set has enjoyed impressive sales figures. Its simplified mechanics and attractive artwork have drawn in new players, proving to be a welcoming entry point, with estimates indicating that about 25% of purchasers were newcomers to the game.
Market Engagement and Consumer Interest
While the Bloomburrow packs are priced lower than those from the previous Modern Horizons 3 set, the number of units sold is reportedly higher. The analyst noted a significant spike in Google search interest for Bloomburrow, reaching approximately 70% more than that for Modern Horizons 3. This increase suggests a pronounced consumer interest comparable to that of sets released during late 2023 like Wilds of Eldraine and Commander Masters.
Anticipation for Future Releases
There is considerable excitement surrounding the upcoming Duskmourn set, as Google search interest for it has already surpassed that for Modern Horizons 3. Following the positive trends in "Magic: The Gathering" sales, BofA Securities has elevated its third-quarter earnings per share (EPS) forecast for Hasbro to $1.27, climbing from $1.14. This expected growth within the Magic segment is anticipated to help balance out challenging comparisons that are arising from the previous year's notable release of Baldur's Gate 3, which had a considerable revenue impact in the third quarter of 2023.
Forward-Looking Projections and Price Target Revisions
The upgraded price target to $90 is based on an expected multiple of 18-19 times the projected EPS of $4.77 for calendar year 2025, reflecting an increase from the previous forecast of $4.65. This optimistic outlook showcases BofA Securities' expectations for ongoing growth and robust performance across Hasbro's product offerings.
Hasbro's Performance and Financial Adjustments
Hasbro Inc (NASDAQ: HAS) has garnered attention for a series of financial adjustments following second-quarter results that exceeded revenue expectations, adjusted EBITDA, and adjusted diluted EPS. Following these positive results, Goldman Sachs also elevated its outlook on Hasbro, tweaking the price target from $62.00 to $65.00. The impressive performance of Hasbro's Wizards of the Coast segment has played a pivotal role in this revenue uplift.
Adjustments from Other Analysts
In light of Hasbro’s recent performance, Roth/MKM made similar positive adjustments, raising its price target from $75 to $82 while crediting the successful turnaround strategy and enhanced operating margin. Additionally, CFRA upgraded its stance on Hasbro from Hold to Buy, increasing its price target to $72, reflecting trust in the company’s continued operational improvement and growth within digital gaming.
Shifting Focus Towards Digital Gaming
Hasbro's journey towards becoming more digital and gaming-focused has been instrumental in its recent achievements, marked by significant investments in digital gaming and enhanced partnerships. The company also raised its full-year guidance due to strong sales performance.
Challenges and Caution Ahead
Despite an optimistic outlook, there is caution surrounding the potential performance of the Wizards of the Coast segment. Hasbro's revised guidance has indicated a more pronounced decline in tabletop revenue for the latter half of 2024 than what was previously expected. Nevertheless, the company's proactive strategies, combined with strong performances in certain segments, suggest they are well-positioned for long-term resilience and success.
Frequently Asked Questions
What recent action did BofA Securities take regarding Hasbro?
BofA Securities raised its price target for Hasbro from $85 to $90, maintaining a Buy rating due to strong sales of the Bloomburrow set.
Why has the Bloomburrow set been successful?
The success of the Bloomburrow set is attributed to its simplified mechanics and appealing art, attracting about 25% new players to the game.
How significant is Google search interest for Bloomburrow?
Google search interest for Bloomburrow peaked at 70% higher than that for Modern Horizons 3, indicating considerable consumer curiosity.
What are future projections for Hasbro's earnings?
BofA Securities revised Hasbro's EPS forecast for the third quarter to $1.27, up from $1.14, anticipating growth due to the success of the Magic segment.
What challenges might Hasbro face moving forward?
Hasbro faces potential challenges regarding tabletop revenue decline in the second half of 2024, as indicated by their updated guidance.
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