Goldman Sachs analyst Stephen Laszczyk reiterated a Neutral rating on the shares of Hasbro Inc
Hasbro reported 2Q24 results that featured a beat across revenue, adjusted EBITDA, and adjusted EPS.
The beat to revenue was driven primarily by better-than-expected Wizards of the Coast revenues and adjusted operating profit, said the analyst.
The analyst is encouraged by the demand and margin trends within Hasbro's Consumer Products segment coming out of 2Q24.
Heading into the back-to-school shopping season, the retailer would garner support from a healthier retail ecosystem and new product innovation, noted the analyst.
Meanwhile, the analyst is more cautious on the trajectory of WOTC as Hasbro guided to Monopoly Go revenues below expectations (~$30 million/quarter vs ~$40 million GSe), and updated WOTC guidance implied a larger than expected 2H24 decline in tabletop revenue.
The analyst increased the estimates for revenues, EPS and free cash flow largely to reflect the strength in consumer products.
The analyst sees three main levers Hasbro can pull to achieve $750 million in gross cost savings by YE2025, which includes headcount reduction (immediate), supply chain optimization (short-term/ongoing), and architecting new toys/products around a more efficient go-to-market strategy (medium-term).
On the Consumer Products side, Hasbro is encouraged by early signs of demand it is seeing for its Beyblade, Deadpool, and Transformers lines and the management expects this to result in low single-digit percentage declines in CP revenue in the third quarter before returning to growth in the fourth quarter, added the analyst.
For Baldur's Gate III, Hasbro now expects ~$30 million of revenue for the full year, major chunk of which was achieved in the first half, noted the analyst.
While the second quarter figure of $40 million revenue in Monopoly Go was well above the analyst's expectation of ~$10-15 million, the analyst considers this was partially a pull-forward of pre-earnings full-year MGO revenue expectation of ~$100 million in 2024.
Price Action: HAS shares are trading higher by 3.17% at $63.47 at last check Friday.
