Goldman Sachs started off coverage on Hasbro ( NASDAQ: HAS ) with a Neutral rating on its view that the toy company's opportunities for growth are balanced by execution risk and the need for deleveraging.
Analyst Michale Ng and team said they are broadly in line with consensus expectations for EPS driven with successful execution against a robust content slate and strong product innovation cycle in play. However, caution is sounded on the company's ability to execute against scaling the Wizards of the Coast Digital Gaming strategy.
On valuation: "At 12.0x NTM EPS, we view valuation as fair relative to the market on a historical basis given the company's elevated leverage profile (4.3x gross leverage vs target of 2.0x to 2.5x) and the degree of execution risk we believe exists in achieving medium-term consensus growth expectations."
Goldman Sach set a price target on Hasbro ( HAS ) of $64, which works out to 12.0X the near-term EPS estimate.
Shares of Hasbro ( HAS ) opened on Wedneday with a 1.34% decline to $58.38.
The Seeking Alpha Quant Rating on Hasbro is set at Hold.
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Hasbro draws cautious view from Goldman Sachs with execution risk seen