Bank of America analyst Jason Haas is bullish on toymakers Mattel ( NASDAQ: MAT ) and Hasbro ( NASDAQ: HAS ), according to new initiation and reinstatement notes released on Thursday.
In notes covering both toy manufacturers, Haas voiced confidence in the ability of both to weather a recessionary storm. He added that the strong properties owned by each and promising content lineups make both Mattel and Hasbro attractive buying opportunities.
“We reinstate on Hasbro with a Buy rating as the company has one of its best ever content lineups ahead with Black Panther this holiday season, followed by Ant-Man, Dungeons & Dragons, Guardians of the Galaxy, Spider-Man, Transformers and Star Wars next year,” Haas told clients on Thursday. “Hasbro is just beginning to benefit from its 2019 acquisition of film studio, eOne, which gives it greater control over its content and release timing.”
He added that consumers have not pulled back on toy spending as much as other discretionary categories, per his channel checks. As such, it should remain resilient even in a recessionary scenario. Meanwhile, the company’s Wizards of the Coast table game-focused business is “underappreciated by the market,” in his view.
A $96 price target was assigned to the stock alongside the “Buy” reinstatement.
Meanwhile, Haas’ initiation of Mattel ( MAT ) highlighted the company’s turnaround since 2018 and falling costs of production.
“We’re initiating on Mattel with a Buy rating as the company has successfully completed its turnaround and is now in growth mode,” he wrote on Thursday. “Mattel had been the #1 toy company globally but slipped to #3 after a series of strategic missteps. Under the leadership of Ynon Kreiz, who came in as CEO in 2018, Mattel’s brands have been revamped and are now being better leveraged with content to drive sales.”
Key content called out included the expected 2023 release of a live action Barbie movie, the return of the Monster High brand via an animated TV show and live action film, as well as the Disney Princess toy license which was recouped in early 2022. Those properties add to staples like Hot Wheels, Masters of the Universe, Polly Pocket, and Barney that build out a compelling IP library in Haas’ view.
“Mattel is a successful turnaround story that we believe the market has not yet fully rewarded,” he concluded. “We expect multiple expansion as the company continues to grow by leveraging its IP through content to drive toy and game sales.”
Haas assigned a $31 price target along with his new “Buy” initiation.
Shares of Hasbro ( HAS ) rose 2.45% in Thursday’s trading while Mattel ( MAT ) stock ticked 2.94% higher.
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Hasbro, Mattel receive new ‘Buy’ ratings from BofA