Funko Analysts Slash Price Targets After Fourth-Quarter-Profit Estimate

Funko shares slumped after a number of Wall Street analysts downgraded the toy designer and distributor. The company's estimate of fourth-quarter results lagged expectations.
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Funko (FNKO) - Get Report shares slumped after a number of Wall Street analysts downgraded the toy designer and distributor in the wake of its weaker-than-expected estimate of fourth-quarter results.

At last check, Funko shares traded at $9.74, down 37%. In the year through Wednesday, the stock had dropped 9.4%.

At least four analysts cut their ratings on the stock, according to Bloomberg. 

Funko estimated fourth-quarter sales at $214 million, down 8% from $233 million in the year-earlier quarter. Analysts were expecting $231 million, according to FactSet.

Funko also said it would take a one-time charge of $16.8 million to dispose of unpopular inventory. 

The Everett, Wash., company, which produces toys, housewares and accessories for "consumers who seek tangible ways to connect with their favorite pop culture brands and characters," is slated to release fourth-quarter earnings March 5.

As for the analysts, Bank of America lowered its rating on Funko to underperform from buy and slashed its price target to $10 from $29, according to Bloomberg.

The analysts wrote in a report that the company would be “heavily reliant on evergreen properties through 2020.” And the coronavirus could upset Funko’s supply chain, thanks to factory closings.

Piper Sandler halved its price target to $12, Bloomberg reports. Its analysts called the fourth-quarter projections “shocking.”

They said the company's performance worsened throughout the period, as it “struggled to offset last year’s Fortnite comparison, did not see as big of a benefit from later-in-quarter releases ("Frozen 2" and "Star Wars") and struggled with GME reorders.”

Jefferies downgraded Funko to hold from buy and cut its price target to $11 from $27, according to Bloomberg. “We are stepping back from our thesis to more objectively evaluate the business stresses and opportunities,” the analysts wrote in a report.