2023-07-31 11:33:53 ET
The Lord of the Rings Magic set sales should help Hasbro ( NASDAQ: HAS ) beat earnings estimates when it reports results this week, prompting BofA to bump its ratings higher.
Shares rose 2.8% on Monday.
Bank of America upgraded its rating to Buy from Neutral with a price objective of $85.
“We expect Hasbro will report an earnings beat given strong demand for The Lord of the Rings Magic set which released in late June,” BofA analysts Jason Haas and Elizabeth L Suzuki wrote in a note. “Magic accounts for roughly 15% of Hasbro’s revenue and 35% of EBITDA.”
The firm said it spoke with local game stores, distributors, players and collectors and was “encouraged to hear strong excitement and demand for this set.”
Collector boxes are currently fetching over $400 on the secondary market. TCGplayer, one of the primary online marketplaces for Magic cards, showed nearly 3x more sell-through than the prior Magic set.
Hasbro ( HAS ) is lagging behind rival Mattel ( MAT ) as the latter has rallied on the overwhelming success of the Barbie movie, which has been supported by an unprecedented marketing cyclone. HAS shares are up 4.1% in 2023 so far, while MAT is up 19% in that time.
Over the past month, during which time the Barbie movie was released in theaters, MAT is up 10% while HAS is down 0.85% .
“We’re encouraged by Hasbro’s reinvestment in in-person gameplay, including the return of the Magic Pro Tour,” BofA said.
“Given strong performance of the Warhammer Magic set last year and Lord of The Rings this year, we’re increasingly bullish on future third-party IP incorporations including Dr. Who (4Q23) and Final Fantasy (2024).”
The firm notes HAS’s toy segment had been negatively impacted by the lack of movies in theaters during the pandemic, and should now see improvements on the movies Transformers: Rise of the Beasts and Spiderman: Across the Spider-Verse, which performed well at the box office this summer.”
HAS has eight Strong Buy ratings from Wall Street analysts, one Buy and three Holds.
Hasbro reports second-quarter earnings on Thursday before the open.
More on toy companies:
- Hasbro brings back late 1990s toy sensation Furby
- Hasbro gains after Bank of America pulls bear rating
- Toy stocks rally as Hasbro, Mattel maintain optimistic outlooks
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Hasbro gets BofA boost as Lord of the Rings helping Q2 sales