The firm said it raised its price target on the toy and game maker following Wednesday's announcement Hasbro will be granted the rights to develop dolls based on the Disney (DIS) Princess and Frozen characters beginning in 2016.
"Hasbro adds the Disney Princess line to its already very successful My Little Pony line, giving girls toys tied to two of their favorite fantasies: princesses and ponies," BMO Capital said. "Should the product line perform as planned, this deal could add 35 cents, or 10% to the company's earnings in 2016."
The firm has a "market perform" rating on Hasbro stock.
Separately, TheStreet Ratings team rates HASBRO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate HASBRO INC (HAS) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HAS's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for HASBRO INC is rather high; currently it is at 55.50%. Regardless of HAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.03% trails the industry average.
- HASBRO INC's earnings per share declined by 7.1% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, HASBRO INC reported lower earnings of $2.17 versus $2.54 in the prior year. This year, the market expects an improvement in earnings ($3.23 versus $2.17).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The debt-to-equity ratio of 1.08 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, HAS has managed to keep a strong quick ratio of 1.87, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: HAS Ratings Report