Hasbro's Cost Cuts And Digital Expansion Underestimated? J.P. Morgan Sees Higher Growth Potential

Core Viewpoint - J.P. Morgan analyst Christopher Horvers maintains an Overweight rating on Hasbro Inc (HAS) with a price target of $75.00, citing strong fourth-quarter performance and optimistic outlook for 2025 [1][8]. Financial Performance - HAS exceeded street expectations for the fourth quarter, driven by strong performance in Consumer Products and Wizards, with operating income 15% above Consensus Metrix [1]. - The 2025 guidance projects EBITDA of $1.1-$1.15 billion, slightly below the consensus of $1.143 billion, aligning with the analyst's expectations [2]. Growth Drivers - Management expressed optimism for sales growth in Wizards and Consumer Products, which was initially expected to underperform [3]. - The outlook for Magic is strengthened by contributions from Final Fantasy and Spider-Man, alongside a turnaround in the Consumer Products business due to a favorable movie slate and affordable product range [4]. Cost Management and Future Projections - Ongoing cost-saving measures, including design-to-value and corporate efficiencies, are expected to make the 2025 forecast achievable [5]. - Management projects EBITDA of approximately $1.4 billion in 2027, exceeding the consensus estimate of $1.3 billion [5]. Market Positioning - The analyst believes consensus estimates for cost efficiency and digital gaming are too conservative, with expectations for growth heading into 2025 [6]. - Retailers, particularly Target Corp, are focusing on driving traffic through events, with toys playing a crucial role in their strategy [7]. Strategic Initiatives - By the end of 2025, the full impact of HAS's $750 million cost-reduction initiative is anticipated, with the consumer products segment benefiting from increased innovation and growth in Magic: The Gathering driven by its Universes Beyond strategy [7].