Hasbro's Strong Quarter Not Without Complications

Barclays described Hasbro, Inc. (NASDAQ: HAS)’s third quarter results as strong but complicated, while maintaining its Equal-Weight rating on the stock.

Hasbro’s third quarter EPS was $2.03, beating Barclays’ EPS estimate of $1.71 and consensus of $1.74. Driven by Disney Princess dolls, the company’s net revenues were $1.67 billion versus Barclays’ $1.57 billion estimate and consensus of $1.55 billion. Gross margins increased 14bps year-over-year to 60.8 percent.

However, the Barclays noted that updated cost guidance implies the company may report lower fourth quarter EPS and operating margins.

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That said, analyst Felicia Hendrix is positive on the company’s strong point of sale (POS) trends heading into the fourth quarter along with a solid entertainment slate in 2017. Notably, the company saw low single digit U.S. POS declines during the third quarter.

As such, Hendrix raised 2016 EPS view to $4.17 from $4.05. However, the analyst maintained 2017 EPS estimate at $4.45.

“While we have believed for some time that the current valuation reflects the positive near term catalysts, we could get more positive if today's results and revised 4Q16 consensus weigh on the stock,” Hendrix wrote in a note.

At time of writing, shares of Hasbro were up 0.09 percent to $81.89. The analyst has a price target of $89 on the stock.