On Wednesday, DA Davidson increased the price target of Funko (NASDAQ:FNKO) shares to $12.00, up from the previous target of $10.50, while reiterating a Buy rating on the stock. The revision follows engagement with Funko's new CEO, Cynthia Williams, who previously held executive positions at Hasbro (NASDAQ:HAS) and Amazon (NASDAQ:AMZN).
Williams shared her positive impressions from visiting the company's facilities, particularly noting the Buckeye, Arizona distribution center as a standout based on her extensive experience with Amazon's fulfillment operations.
The company has also set a performance target for Williams's stock options, which are set to vest if the share price reaches $25.17 within the next four years. This incentive is part of the broader confidence in the new CEO's ability to steer the company forward. Williams has indicated that previous operational issues at Funko have been resolved, adding to the firm's positive outlook.
Additionally, the announcement of the release date for Funko's new video game, Funko Fusion, slated for September 13, has contributed to DA Davidson's optimistic stance. The firm has adjusted its price-to-earnings (P/E) ratio target for Funko to 23 times, up from 20 times, based on projected earnings per share (EPS) of $0.52 for the year 2025.
This price target adjustment reflects DA Davidson's belief in the potential growth and profitability of Funko under the guidance of CEO Cynthia Williams. The upward revision of the price target is tied to the firm's confidence in the company's future performance and strategic initiatives, including the forthcoming launch of Funko Fusion.
In other recent news, Funko reported strong Q1 net sales of $216 million and an adjusted EBITDA of $10 million, maintaining their 2024 financial outlook with expected net sales between $1.047 billion and $1.103 billion, and an adjusted EBITDA between $65 million and $85 million.
The company also announced the appointment of Cynthia Williams as their new CEO, who is set to focus on growth opportunities such as direct-to-consumer sales and international expansion.
In addition to these developments, analysts at B.Riley have raised their price target for Funko shares to $13.00, up from the previous $12.00, following a meeting with the new CEO and a tour of the company's retail store.
They expressed confidence in Williams' ability to drive sales growth and margin expansion for Funko in the coming years. The firm's projection for Funko's shares anticipates a potential rise above $20 by 2026. These are some of the recent developments for Funko.
InvestingPro Insights
With the recent positive developments at Funko (NASDAQ:FNKO), including the price target increase by DA Davidson, investors might be looking for additional insights to gauge the company's financial health and future prospects. According to real-time data from InvestingPro, Funko's market capitalization stands at $520.98 million, and despite recent operational improvements, the company has a negative P/E ratio of -3.88, indicating it is not currently profitable. However, the company has experienced a significant price return of 52.83% over the last three months, showcasing strong recent performance in the market.
InvestingPro Tips reveal that Funko has high shareholder yield and that analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's potential to improve its financial outcomes. Additionally, there are 9 additional tips available on InvestingPro for those interested in a deeper analysis of Funko's financial metrics and stock performance. To gain access to these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
While the company's revenue has seen a decline of -16.3% over the last twelve months, the strong return over the last month and three months indicates that investor sentiment may be shifting more positively. The InvestingPro Fair Value estimate of $9.79 suggests that the stock is currently valued fairly in the market. These metrics and tips, when combined with the strategic initiatives under CEO Cynthia Williams, could provide investors with a nuanced view of Funko's investment potential.
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