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Hasbro Earnings Confuse Wall Street on Which Way Stock Will Go

By Rich Duprey - Updated Feb 9, 2021 at 10:09AM

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The toymaker is still a long-term buy, but the more immediate outlook is mixed.

Hasbro (HAS -0.65%) reported fourth-quarter earnings yesterday and the results are having the same effect on Wall Street analysts as they had on the stock market. 

Despite beating analyst projections for the top and bottom line, the toymaker's stock dropped 5% Tuesday from where it previously closed. Now the analysts can't seem to decide whether it means Hasbro's stock is going to go up or down.

Mother and daughter in toy store

Image source: Getty Images.

A two-way street

BMO Capital analyst Gerrick Johnson has the more pessimistic outlook as he lowered his price target for the stock from $90 to $85 per share. Although he maintained an outperform rating on the toymaker, Johnson says the surprising weakness in Hasbro's toy business will continue to weigh on the better performance from its Entertainment One TV production unit.

The analyst was also disappointed by Hasbro's guidance for the coming year, which he deems will be an "investment year" for the company as it comes up against difficult comparisons from the year before. The toymaker got a boost last year as the COVID-19 pandemic forced consumers to stay at home and look for entertainment alternatives.

That could be why D.A. Davidson analyst Linda Bolton Weiser raised her price target for Hasbro to $115 per share from $105 because she still expects sales to grow faster in 2021 than previously expected.

Although she does think Hasbro's earnings will be affected, which is why she narrowed her full-year forecast to $4.05 per share from $4.48, Weiser sees sales growth accelerating to 7% from the 4% she previously modeled.

Weiser also maintained her buy rating on the stock.

A turnaround in the toymaker's international business, its weak spot right now, could eventually cause the stock to reverse course, but that will play out over the quarters to come.

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