Toy companies are expected to report largely in-line Q2 results, supported by healthy consumer demand and easing input costs, BofA Securities said in a note Thursday.
The analysts said Hasbro (HAS) reports on July 21 and is expected to deliver earnings per share of $1.15, slightly ahead of the Visible Alpha consensus of $1.12.
The analysts have raised their revenue estimate by 100 basis points and now expect Wizards of the Coast margins of 43.3%, slightly above the consensus.
The company's results will also depend on Magic: The Gathering, with the Wizards of the Coast and Digital Gaming segment expected to generate the majority of Q2 operating profit.
BofA projects the segment's operating profit at $263.8 million, the analysts said, adding that the segment drove the Q1 earnings beat with 26% revenue growth.
The analysts said Mattel (MAT) reports on Aug. 4, and they forecast Q2 EPS of $0.05, in line with consensus, while keeping their full-year EPS estimate of $1.34 unchanged. The analysts also expect management to reiterate its outlook for this year.
"While core toys have experienced limited revenue growth, Mattel has consistently generated free cash flow, and the shares today trade at a 10% free cash flow yield, one of the highest in our Leisure coverage," the analysts added.
BofA lowered Hasbro's price target to $105 from $115 while keeping its buy rating. The firm also maintained a buy rating and a $22 price target on Mattel.
Price: 81.99, Change: +1.48, Percent Change: +1.84
Comments