It has been a difficult environment for U.S. toy companies in 2017, with retailer bankruptcies and digital competition weighing on sales. However, there has been a clear-cut winner among the two largest toy competitors in 2017, and Hasbro, Inc. (Nasdaq: HAS) is well-positioned to continue to outperform Mattel, Inc. (MAT) in 2018 as well.
Hasbro has been the clear-cut winner between the two toy giants in 2017. Hasbro stock has gained 19.8 percent on the year, while Mattel stock has plummeted 42.5 percent.
According to B. Riley FBR analyst Susan Anderson, Hasbro has a number of key drivers ahead that make the stock a solid investment, while Mattel is still struggling to transition its business.
Anderson says Hasbro’s Star Wars business showed signs of life in the third quarter after multiple quarters of declining sales. B. Riley’s recent checks indicate Star Wars merchandise is selling well this holiday season thanks to the success of “Star Wars: The Last Jedi.” Looking ahead to 2018, Anderson says “Avengers: Infinity War,” which is set for release in the second quarter, could pick up where Star Wars left off for Hasbro.
In addition to a Star Wars tailwind, Anderson says Hasbro has limited exposure to Toys “R” Us, which declared bankruptcy in September. B. Riley estimates that every 100 stores that Toys “R” Us closes represents only about 0.6 percent of Mattel’s total revenue.
Finally, Anderson says Hasbro’s games business, including board games, digital games and puzzles, offer a rare source of robust growth.
“We believe this is a significant buying opportunity for a high-quality stock that should see a resurgence in partner brands with Star Wars and an end in sight with regard to the Toys ‘R’ Us bankruptcy,” Anderson says.
On the other hand, she says Mattel investors should expect more pain ahead as the company struggles to cut costs and transition to the digital age of games and toys. “While we view MAT’s brands as strong and iconic, MAT is going…
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