Citi upgrades Hasbro as it sees limited downside from tariffs

Investing.com -- Citi upgraded Hasbro Inc (NASDAQ: HAS) to Buy from Neutral saying robust growth in its gaming unit, specifically Wizards of the Coast, is outweighing concerns over new U.S. tariffs and weak consumer spending.

The brokerage raised its price target on Hasbro to $72 from $55, implying a 24% total return.

Analysts said Hasbro has been the biggest positive surprise in the post-tariff announcement environment, driven by stronger-than-expected performance in its gaming business.

“Investors now get another swing at the Hasbro transformation story, at a cheaper price, and with added visibility on the stellar momentum underway at WotC,” Citi wrote.

Hasbro reported first-quarter adjusted earnings per share of $1.04, well above Wall Street’s consensus of $0.68. Revenue rose 17% year-over-year to $887 million, also beating expectations. Adjusted EBITDA reached $274 million, with a margin of 31% versus the Street’s 27% estimate.

Despite assuming harsh trade and consumer conditions, including headline tariffs of 145% on China and a recession-level retail environment, Hasbro kept full-year guidance unchanged.

Citi said that stance flipped the company’s risk profile, making future tariff headlines more likely to bring upside than downside.

Wizards of the Coast (WotC) sales guidance was raised from 5-7% to the mid-to-high teens, with margin expectations also moving higher.

Citi estimates a roughly $150 million, or 25%, increase in WotC EBIT based on the new guidance.

Citi’s new valuation assigns $64 of the $72 target price to WotC, with the Consumer Products and Entertainment units contributing the remainder.

While Hasbro shares have rebounded recently, they remain down about 13% since the company’s last earnings report, offering what Citi sees as another entry point into the turnaround story.

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