Consumer Products

Hasbro and Mattel Earnings: Will These Toy Makers Withstand China's Coronavirus?

Two of the biggest names in the toy business are reporting quarterly results this week, and analysts are checking to see if China may play into these results. Hasbro Inc. (NASDAQ: HAS) and Mattel Inc. (NASDAQ: MAT) have long been dominant names in this industry, but growing coronavirus concerns could kneecap these companies, as a majority of their production comes from the People’s Republic.

The coronavirus has proved to be problematic, with Chinese production and the trade war definitely hurting companies with manufacturing bases, so there seems to be a bearish sentiment for these toymakers. This is especially pronounced with most retailers having a rough holiday season.

This past summer, Hasbro announced that it would be moving production out of China. Currently, Chinese manufacturing represents roughly 67% of Hasbro’s products, and the company hopes to drop this number to 50% by the end of 2020.

On the other hand, the majority of Mattel’s Hot Wheels and Barbie product lines are not manufactured in China, and these are some of Mattel’s best sellers. Mattel may be more insulated in this regard.

Hasbro is scheduled to release its most recent results on Tuesday morning. Analysts are calling for $0.91 in earnings per share (EPS) and $1.44 billion in revenue. The fourth quarter of last year reportedly had $1.33 in EPS and $1.39 billion in revenue.

Here’s what analysts said about Hasbro ahead of results:

  • Merrill Lynch has a Neutral rating with a $117 price target.
  • JPMorgan’s Neutral rating comes with a $113 price target.
  • Wells Fargo rates it as Equal Weight with a $105 price target.
  • MKM Partners has a Buy rating and a $125 price target.
  • UBS Group has a Buy rating with a $117 price target.

Excluding Monday’s move, Hasbro stock had underperformed the broad markets with a gain of only 10.5% in the past 52 weeks. In just the past quarter alone, the share price was up 5%.

Mattel is set to report its fourth quarter after the markets close Thursday. The consensus forecast is $0.01 in EPS and $1.5 billion in revenue. In the same period of last year, it said it had $0.04 in EPS and $1.52 billion in revenue.

Ahead of the report, analysts weighed in on the stock:

  • JPMorgan has an Overweight rating and a $17 price target.
  • Stifel has a Hold rating with a $14 target price.
  • Jefferies has a Hold rating with a $10.50 price target.

Overall, Mattel stock has underperformed the broad markets with a gain of 14% in the past year. However, in the past quarter, the stock is up close to 17%.

Mattel stock traded up 1% Monday to $14.26, in a 52-week range of $9.06 to $17.27. The consensus price target is $14.08.

Hasbro stock was last seen up about 1% at $100.86. The 52-week range is $82.87 to $126.87, and the consensus analyst target is $116.27.

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