On Thursday, CFRA adjusted its stance on Hasbro shares (NASDAQ:HAS), downgrading the stock from Buy to Hold, while increasing the price target to $59.00 from the previous $53.00. The revised stock price target is based on an 18.2 times multiple of the firm's 2024 earnings per share (EPS) estimate, aligning with Hasbro's five-year average forward price-to-earnings (P/E) ratio.
The firm retains its EPS forecasts for 2024 and 2025 at $3.25 and $3.75, respectively. Despite the stock's significant rise, climbing 30% from its November lows, analysts consider it to be fairly valued at the current level. This assessment comes as Hasbro's largest segment, Consumer Products, continues to see revenue decline—a trend expected to persist throughout 2024.
The company's overall strategy and the robust performance of its Digital Gaming segment are viewed positively. Nonetheless, the lack of growth across all segments has led to the belief that Hasbro's valuation will remain below the pre-pandemic multiple of 20 times forward EPS.
The firm's full-year guidance is deemed conservative, and while there are multiple economic challenges facing the U.S. consumer, significant upward revisions to the company's outlook are not anticipated over the coming year.
In summary, with all factors considered, CFRA recommends a Hold position on Hasbro, projecting limited potential for stock appreciation in the next 12 months.
InvestingPro Insights
Reflecting on CFRA's recent downgrade of Hasbro (NASDAQ:HAS), it's pertinent to consider the company's financial health and market performance. As per InvestingPro data, Hasbro's market capitalization stands at approximately $7.79 billion, with a notably high Price / Book ratio of 7.34 as of the last twelve months ending Q4 2023.
This suggests the stock is trading at a premium compared to the company's book value. Despite a challenging revenue trend with a decline of 14.57% over the same period, the company has maintained a strong gross profit margin of 48.37%.
InvestingPro Tips indicate that while net income is expected to grow this year, analysts foresee a sales decline in the current year. This aligns with CFRA's observation of revenue challenges in the Consumer Products segment. Furthermore, Hasbro has a commendable history of dividend payments, having maintained them for 44 consecutive years, with a dividend yield of 5.05% as of the latest data.
This could be a point of interest for income-focused investors. The company's stock has also shown resilience with a strong return over the last three months, registering a 16.25% price total return.
For those looking to delve deeper into Hasbro's financials and market prospects, InvestingPro offers a comprehensive suite of additional tips and metrics. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full potential of InvestingPro's insights. There are currently 6 more InvestingPro Tips available that can further guide investment decisions regarding Hasbro shares.
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