BofA Securities updated its outlook on Hasbro shares, raising the price target to $90 from the previous $85 while maintaining a Buy rating. The adjustment follows positive feedback from the release of Hasbro's new "Magic: The Gathering" Bloomburrow set, which has been well received in the gaming community.
According to BofA Securities, conversations with game shop owners, employees, and "Magic: The Gathering" players indicate that the Bloomburrow set has performed strongly in sales. The set's simpler mechanics and appealing art have attracted new players, with estimates suggesting that approximately 25% of customers were newcomers to the game.
Despite the lower price point of standard packs for Bloomburrow compared to the Modern Horizons 3 set, the volume of units sold is reportedly higher.
The analyst noted that Google (NASDAQ:GOOGL) search interest for Bloomburrow peaked at roughly 70% higher than that for Modern Horizons 3, indicating significant consumer interest. The interest for Bloomburrow and Modern Horizons 3 also surpassed that for sets released in the third quarter of 2023, such as Wilds of Eldraine and Commander Masters.
There is considerable anticipation for the upcoming Duskmourn set, with Google search interest already exceeding that of Modern Horizons 3. In response to the positive trends in "Magic: The Gathering" sales, BofA Securities has raised its third-quarter earnings per share (EPS) estimate for Hasbro to $1.27, up from $1.14. The firm expects this growth in the Magic segment to help balance the challenging comparisons with the previous year's release of Baldur's Gate 3, which generated significant revenue in the third quarter of 2023.
The raised price objective to $90 is based on an 18-19 times multiple of the projected calendar year 2025 EPS of $4.77, an increase from the earlier forecast of $4.65. This optimistic outlook reflects BofA Securities' expectation of continued growth and strong performance in Hasbro's product lines.
Hasbro Inc (NASDAQ:HAS). has been a focal point of several financial adjustments following its second quarter 2024 results, which exceeded expectations in terms of revenue, adjusted EBITDA, and adjusted diluted EPS. Goldman Sachs (NYSE:GS) revised its outlook on Hasbro, raising the price target from $62.00 to $65.00, with the success of the company's Wizards of the Coast segment contributing significantly to the revenue beat.
Roth/MKM also adjusted Hasbro's financial outlook positively, raising the price target from $75 to $82, citing the effectiveness of Hasbro's turnaround strategy and improved operating margin. CFRA upgraded Hasbro from Hold to Buy and increased its price target to $72, emphasizing the company's continued improvement in operating margin and growth in digital gaming.
Hasbro's transformation into a more digital and gaming-oriented company has been a key factor in its recent performance, with significant investments in digital games and partnerships. The company also raised its full-year guidance based on strong performance.
However, caution was advised regarding future performance of the Wizards of the Coast segment, with Hasbro's updated guidance suggesting a more significant decline in tabletop revenue for the second half of 2024 than previously anticipated.
Despite some declines in revenue, the company's proactive measures and strong performance in certain segments suggest a resilient strategy aimed at long-term success.
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