Toy Makers Hasbro (HAS, $88.85) and Mattel (MAT, $12.44) Look for Comeback in 2019
Toy making giants, Hasbro Inc. and Mattel Inc., both ended 2018 on a low after broad-based underperformance.
Even still, many analysts continue to have a Buy rating on Hasbro but lowered the price target to $102 from $110. For Mattel, analysts still have a neutral rating with a $12 price target, down from $13.
The reasons for pinning hopes on Hasbro to bounce back in 2019 -- despite forecasts of average growth in the new year -- are a combination of Hasbro’s strong product pipeline, on-going efficiencies, and easing revenue headwinds as well as a high single-digit dividend increase, and the possibility of more share repurchases that are likely to attract investors.
A lower than estimated Q4 performance indicates that the market is still dealing with the Toys 'R' Us bankruptcy last year, but the brighter side is that stores don’t seem to have a lot of leftover toys indicating reduced inventory liquidations.
In the case of Mattel, analysts are hopeful the reduced inventories across different stores are likely to benefit the company. However, in terms of product performance, except for the iconic Barbie line, the path to recovery is still some distance away for majority of its products. A majority of Mattel’s products performed poorly during the last holiday season.
On the bright side, another successful year by the Barbie line and Mattel’s recent announcement regarding its collaboration with Warner Bros. for a Barbie-themed movie are keeping investors hopeful.
Mattel also has to replace an estimated $40 million in revenue in 2020 from the loss of action figure licenses for DC comic characters.
